Money Tips: What's Dependent Spouse Syndrome?

    Kelly, a stay-at-home parent, can no longer afford to heat her home adequately in the winter and rations her family’s electricity to homework hours right after school. She is the mother of a second and fourth grader. Her ex spouse used to make more than $300,000 a year until the couple filed for divorce and he lost his job. As a divorce financial professional, I repeatedly see the standard of living of dependent spouses plummet once their relationship with the wage earner of the family sours. In the process, their children’s lives are frequently shattered.  

Often without thinking about it, caregiver spouses take on disproportionate financial risk in a traditional marriage. This is because household income does not usually belong to the household at all, but to the wage earner. Typically, only if the wage earner puts money into a joint account/asset or gives his dependent spouse money does (s)he gain access to the family nest egg. This state of dependence does not end when the children leave home. Generally, retirement and healthcare plans are also in the name of the wage earner only. Ironically, often the only way a dependent spouse can gain control over assets accumulated during the course of a marriage is through divorce. 

5 TIPS TO LESSEN YOUR FINANCIAL RISK

1. Keep some money in your own name.
Money gives you freedom of choice and power. So it’s difficult to feel empowered if you don’t have any in your own name. Frequently, dependent spouses build up a nest egg before children and then spend it all on family needs once they’ve given up work. This is a mistake. If one salary doesn’t cover all expenses, then you need to acknowledge this up front and budget accordingly. Keep some money in your own name just in case.
 
2. Know the advantages of having your name on marital property.
If your name is not on the title of an asset, you most likely have no control over it. If your car/home is in your spouse’s name alone, (s)he can take out a loan (mortgage) equal to most of its value and you might not even know about it. (S)he can also sell it without your consent.  

3. Protect your credit rating.
If you have joint debt with your spouse, your credit ratings are tightly linked. This means that if one of you is late on a payment, both of your credit ratings take a hit. If you do not have an independent ability to pay, be careful before cosigning mortgages and credit card obligations because you will become liable for them. Credit scores are becoming increasingly important. Manage yours accordingly.  

4. Set money aside for retirement years in your own name.
t’s empowering to have a retirement account in your own name. If your spouse contributes to an employer-sponsored plan, you might still benefit from having your own retirement plan (like a traditional IRA or ROTH IRA) if you want to maintain some control over your own finances in your senior years.                                                                                                                     

5. Keep up career skills.
If you’ve decided to take time out of the workforce, don’t become complacent about your career skills. Keep up with your computer skills, your professional network and education. The idea of starting all over again can be overwhelming.   


Any opinions are those of Elizabeth Cox and not necessarily those of RJFS. Raymond James is not affiliated with and does not endorse, authorize or sponsor this Web site any of the other listed Web sites, or their respective sponsors. Elizabeth Cox is a Certified Financial Planner™ and an independent financial advisor with Raymond James financial services, a member of FINRA/SIPC. She provides clients with a broad range of financial services including financial planning, pre- and post-divorce financial analysis, investment management, and retirement analysis. Elizabeth Cox can be contacted by e-mail at elizabeth.cox@raymondjames.com, or through her Web site, www.divorcefinancialservices.com.