- Gambling addiction can destroy a family. The addict will consume any and all resources, from retirement to children's 529 accounts.
- Protect yourself from the fallout by reviewing account statements and tax returns, and documenting the problem.
- Options for further protection include post-nuptial agreement and divorce.
Marital problems can be difficult if not impossible to navigate unless both parties have a baseline of trust. Addictions often shatter that trust to such an extent that the marriage cannot be salvaged.
In my family and matrimonial law practice, I regularly work with clients who are exiting marriages due to unresolvable fissures in trust. Marriages fall apart for many reasons, including extramarital affairs, mental health disorders including narcissistic personality disorder, and struggles with addictive behaviors. I often deal with marital issues that arise from substance abuse addictions including alcohol or drug addiction — including addiction to pain medications. However, addictions come in many forms.
Gambling addiction is an often overlooked and less commonplace addiction, but like many addictive behaviors, it can ruin a relationship and break apart a family.
Not only can a gambling addiction break the trust and bond of a couple, but it can destroy the family's finances. A study reported by the North American Foundation for Gambling Addiction Help suggested more than 10 million people in the U.S. have a gambling problem.
I have represented many spouses married to gamblers. Sadly, the gambler will stop at nothing to acquire whatever finances they can in order to satisfy their compulsion to gamble. They can and will decimate the entire family fortune, like a tornado that rips through buildings. The gambler will find money to gamble anywhere, including your bank accounts, retirement accounts, brokerage accounts, and even your children’s 529 accounts. There is no end unless you end it. Nothing is sacred as the need to gamble is too great.
And while you want to do everything you can to assist your spouse or ex-spouse in getting help to get their addiction under control, you also need to batten down the hatches and safeguard the family finances before it is too late. Substantial resources can be lost. And like many addictions, the person needs to admit they need help before the addictive behavior can be brought under control. (See "Resources" below.)
According to Stacy Francis, founder of Francis Financial, and non-profit, Savvy Ladies, a 501 (c) (3) dedicated to helping women achieve financial independence, “Pathological gamblers do not make good partners, and their spouse and children pay the price of the gambling habit. Compulsive gamblers will sometimes hide their debts from family and friends, leaving the family financially devastated. If you are concerned that your spouse has an unhealthy relationship with gambling, you must seek advice from a professional sooner rather than later.”
All of this said, there are ways you can legally protect yourself and your family’s finances.
Document everything and seek help as soon as you can
How soon you seek professional help can be the deciding factor between ending up with shared debt or saving yourself and preserving your financial freedom.
Collect financial information from as far back into your relationship as you can, certainly since the addiction seems to have begun.
This should include bank statements, retirement account statements, 529 accounts, credit card statements, mortgage statements, and tax returns. Start to analyze the documents, looking for charges that are not recognizable and withdrawals or loans from your bank, investment and retirement accounts. Ask your spouse about these withdrawals and/or charges and while staying calm, think about whether the explanations make sense. Is there a sudden shortage of monies even though you are both earning sufficient funds to pay the bills and save?
You might need to show documentation and evidence of the behavior in custody or financial divorce litigation. Retain an attorney and a financial professional as soon as you discover that monies are being gambled away. If you wait, it could be too late.
Consider a postnuptial agreement
If you have decided to remain married or are not yet ready to file 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.
Most importantly, you can protect your assets and future income from a gambling spouse by separating your finances and the termination of joint credit cards, joint accounts, and the pooling of income. You can also make provisions to recover an equitable portion of the monies spent down on the addiction. Make sure that your joint tax returns were filed timely. I have seen many gamblers and other spouses who are guilty of marital waste utilize the monies that belong to Uncle Sam to support their addictions. In the event that monies are owed to the government, you must make sure that the postnuptial agreement addresses these tax issues.
Ask for a divorce
If, on the other hand, you have determined that it is best to divorce, you can commence 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 and liabilities.
Tell your attorney about gambling 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 gambling addiction or other out-of-control spending problem. It is also critical to account for the marital waste that resulted from the addiction so that assets can be equitably divided.
If you are already working with an attorney, let your attorney know of your specific concerns immediately. You may want to show your attorney 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 marital assets.
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, etc.).
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. While a letter is not a substitute for restraining orders, it does indicate that you are not condoning the spending down of assets.
Enlist the help of a mental health professional and a financial advisor
In addition to working with an attorney, it may also be helpful to work with a mental health professional to address some of these issues with your spouse. Moreover, it may be very useful to speak with a financial advisor to plan for your future.
And as I always say, it is most important to make the safety and mental health of yourself and your children a priority during this incredibly difficult time.
Reach out through the Gambling Anonymous hotline.
Savvy Ladies brings financial guidance to women and offers a free financial helpline, where highly experienced Certified Financial Planner volunteers are available for a confidential phone call and eager to advise women about their personal financial situation.
There are many resources out there that can provide women with the right steps to exit their current environment and lead them to a secure financial future.
Note: This post is not intended to serve as legal or mental health advice. Each situation is unique. Please reach out to a local therapist or attorney to address your issues specifically.