Lisa Zeiderman, Managing Partner at Miller Zeiderman LLP, authors the latest article for her “Legal Matters” blog in Psychology Today to give readers legal tips to protect their finances from a spouse’s over-spending. Read the full article below.
Manic Spending Causes Anxiety, Particularly During Divorce
- When in the midst of a divorce, there are ways to legally protect your finances from a spouse’s over-spending.
- Cancel joint accounts, consider a postnuptial agreement, and keep documentation of the spending patterns.
- Talk to a mental health professional and ask your spouse to do the same. There is help for this and other related challenges.
With the holiday season behind us, you may be facing credit card bills resulting from a spouse’s manic spending. This is particularly stressful if you are considering, or in the throes of a divorce.
As a matrimonial and family law attorney and a certified divorce financial analyst, I often meet with people concerned about protecting themselves financially from a spouse’s out-of-control shopping habits while they are in the process of divorcing.
Challenges related to divorce and finances are difficult enough to navigate, but if you add the stress of dealing with a spouse who is suffering from mental health challenges, the anxiety can sometimes feel like too much to bear.
I work with mental health professionals regularly, and one symptom of a manic episode, though it is not true of all people suffering from issues of mania, is poor decision-making, which can include, going on spending sprees. The emotional stressors that imbue the holiday season combined with the in-your-face advertising campaigns of most retailers can trigger an episode that could add another financial challenge to what may already be a source of stress.
There are a few things you can do to legally protect yourself and your finances when married or proceeding through a divorce with a spouse who suffers from bipolar disorder or another mania-related disorder. (Please note, not every person with bipolar disorder or any mental health disorder has these symptoms.)
Consider a postnuptial agreement
If you have decided to remain married for now and are not yet filing for divorce, you have the option of entering into a postnuptial agreement with your spouse, delineating and dividing assets and income during and in the event of a divorce and or the death of either you or your spouse. A postnuptial agreement is similar in concept to a prenuptial agreement but is executed during the marriage instead of prior to the marriage.
The postnuptial agreement can specify what assets are to be divided now and in the future, and how and if support is to be paid for a spouse. If you and your spouse already have children, you can also determine such issues as custody and child support.
Terminate joint accounts
Very importantly, you can protect your assets and future income from manic spending episodes with indemnifications and the termination of joint credit cards, joint accounts, and the pooling of income.
If you are in the midst of a divorce action:
Typically, the period between filing for divorce and the signing of the final settlement agreement will take many months—and in more complex matters, years.
During that time, both spouses are required to file detailed “financial affidavits” with the court, attesting under oath to their expenses and individual finances in a document known as a Statement of Net Worth, which ultimately forms the basis for setting child support, alimony payments and equitable distribution of assets.
Tell your attorney about manic spending concerns immediately
While a divorce action is pending, it is critical to maintain the financial status quo, and it is also imperative to protect assets and income if one spouse has a mental health challenge that manifests in out-of-control spending.
If you are already working with an attorney, let your attorney know of your specific concerns immediately. You may want to show your lawyer recent credit card statements, bank account statements, and provide specific documentation illustrating your concerns. Your attorney can file a Summons with Notice. That generally sets a date to value the assets and liabilities and should in most cases end the spending down of joint accounts.
The date of commencement of your divorce action sets a date to determine assets (brokerage accounts, retirement assets, banking and savings accounts) and liabilities (credit card balances and Home Equity Lines of Credit, etcetera).
If you cannot accomplish this in a timely way, you must make clear to your spouse in writing that spending from any joint account is not allowed as of a certain date or that expenses must be capped at an agreed-upon dollar amount.