How do I protect myself from my financially irresponsible spouse?

These are unprecedented economic times. Businesses and investments have become tricky to run. And sometimes, marital relationships are built on foundations that might be considered sandy.

Some people end up together only based on the financial benefits they receive from their partners. Nowadays, it is not uncommon for spouses to help each other out in financial matters concerning the household.

The growth and a couple’s standing in society is also considered not only in terms of the family’s size (children) and careers of the spouses but also their financial muscle and assets accumulation.

However, financial or money matters are also among the leading causes of strain in many marriages. When hard times happen in most unions, it is not unheard of that a partner will walk away from the situation.

Some even refuse to bail out the other if they feel either the finances required will endanger the financial capabilities of the family or the risk is too high. Sometimes, a spouse can find themselves locked out of what they thought were investments or properties they thought were matrimonial property.

Matrimonial property

Matrimonial property is any property that you acquire during the subsistence of the marriage. However, matrimonial property can only be put in place where no other law supersedes it.

For example, unless spouses open a joint account when putting money in financial institutions, then whoever is stated as “next of kin” or “beneficiary” gets left with the money after the demise or incapacity (physical or mental inability to manage one's affairs).

Martha Nzomo, an accredited financial adviser working at ICEA Lions Group helps individuals, companies and groups invest their money depending on their short-term, medium-term and long-term needs. She also helps do pension transfers and consolidation.

“In my experience, not everyone automatically puts their spouses as next of kin. Because it’s not a must, I can put my father, mother, sister or brother. Unless I come and update that later,” says Ms Nzomo.

She says people prefer putting the names of people they trust in the beneficiary’s clause of their investment products’ forms as you don't need to put your spouse. Others say they are doing that to diversify and ensure there’s no family conflict since they’ve already put their spouses on their other investments.

Joint accounts

In instances where couples want to have a short-term savings account, like a money market account where you can access money from time to time, the company’s policy is that they must have opened a joint bank account where the money can be deposited when making withdrawals.

“Today, we may have been on good terms and we opened a joint money market account. But along the way we fall out. Who are they then supposed to pay that money to? How are they supposed to favour one party over the other? We can’t pick sides,” says Ms Nzomo on the reason for the policy.

However, for things like school fees policy, because it is done through consent. The couple can decide to who the money is sent in the end; after maturity of the policy.

Outline financial obligations

However, she believes that agreeing that the financial obligations that they each individually had before coming together should stay separate and not automatically consolidated is the best way.

“Whatever you did with your money, that’s yours. Whatever I did with mine, that’s mine. However, you need to state what the purpose of opening a joint account is, like family trips or the children’s future education. Always make sure the mandate (how the account is to be run) requires both of your consents; on everything,” says Ms Nzomo, who has been in the industry for slightly over 10 years.

Read the fine print

Another thing you might want to also do is make sure you read all documents on matters financial that a spouse brings to you with regards to assets or accounts you hold together. The law states that ignorance is not a defence, and that also comes down to where a spouse claims they did not know what the other person was attaching as collateral to loans taken for various reasons.

“You may have owned a piece of land, but while in a marriage you built on that piece of land. The buildings then become matrimonial property while the land remains individual property. Matrimonial property is co-owned with your spouse even if they did not contribute money in their acquisition through what is called contribution in kind. However, the other spouse has to have knowledge of the dealings of the other or else they won’t be able to claim these,” says Christine Muthoni, an advocate of the High Court.

After divorce

After a divorce, the next thing that happens is the division of property. If you have a lawyer, you will file a suit called a declaration of interest in matrimonial property. A good lawyer will file this even before filing for division of matrimonial property; pending hearing and determination of the divorce; to ask for an injunction giving a list of the properties one knows they own so that they are not interfered with.

Interference may include transfer of ownership to either one’s mother or a company they have registered, or selling off of some property whose benefits they believe the other spouse shouldn’t be able to enjoy.

Even inheritance received during the subsistence of a marriage becomes matrimonial property and the other spouse is entitled to a share of that, says Ms Muthoni.

“If you don’t want your spouse to interfere with anything you acquired before or during your marriage, I encourage people to do pre-nuptial agreements. Disclosure is important. You list down everything and say in case of a divorce, the property I have before the date of the marriage cannot be touched,” adds the certified divorce coach, by the International Coach Federation – ICF, who is a published author with her book Conscious Uncoupling.

Also, you may decide to do post-nuptial agreements and they will still hold in court.

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