Question:

I recently received a VA disability back pay. I am now considering divorce. I tucked this money away in a separate bank account so it is completely isolated from our mutual funds. I am willing to disclose this as asset to be completely honest to the court, but I also want to consider putting the money into stocks so I can allow it to grow a little. What investment opportunities would make these funds an asset the court can divide up to my husband? Does my husband have rights to these funds even if I left them in a bank account with just my name and did not invest them since I received them while married? Thanks for your time.

Jim's Reply:

I'll cut to the chase and answer what I think is your primary question, "Does my husband have rights to these funds"? 

The answer is Yes. Or no. It could be maybe.

Only the divorce court can determine who owes what to who. The court will achieve that goal by asking for an honest and accurate report of the assets, obligations, incomes and so on of the marriage. Each party will be required to submit a financial statement and the court will use that information to determine future financial obligations.

As is always the case, honesty is the very best policy. When we go before a court we begin with very little other than our credibility. As soon as the court thinks you may be fudging the facts you lose that cred and it's often downhill from there.

It really doesn't matter if the money is kept in a separate account, invested in stocks or other investment vehicles that have a financial and regulatory path that can be clearly understood by the court. At the time of divorce wherever that money is it must be appropriately reported to the court for adjudication. 

Anything less...withholding information from the court...may be contempt of court and you don't want to go there.