What's in your spouse's wallet?

In a recent poll, four out of five respondents revealed that they hide purchases from the one they love.

(Money Magazine) -- If Silda Spitzer had only made it her business to look at her husband's bank statements, the story might have ended so differently.

Maybe seeing the mysterious multi-thousand-dollar wire transfers would have tipped her off that something was awry, and she could have dealt with the situation privately. Then, perhaps, her husband Eliot might still be governor of New York.

Alas, discussing their money was apparently not at the top of the Spitzers' agenda. In that, they're hardly unusual. A growing body of research shows that married couples are astonishingly clueless about many aspects of their financial life together.

Consider: Half of the pairs in a 2003 study came up with completely different figures when asked to estimate their family's income and net worth. In a survey last year of couples ages 43 to 70, some 35% were more than two years off when guessing when their spouse planned to retire.

About a third of those surveyed admitted to lying to their partner about money. And four out of five respondents in another poll revealed that they hide purchases from the one they love.

How much do you know? Tell us.

What in heaven's name is going on here? Blame at least part of the problem on the way so many couples divide financial labor in the family. Maybe he does the investing and she pays the bills, or he buys the insurance while she files their taxes. As long as there are no obvious snafus, each is content to let the other handle whatever he or she is handling.

Then too, couples these days marry later than they used to and come into the union with their own credit cards, bank accounts and investments, which often stay separate. And if you're convinced that sharing what you've spent or saved will spark criticism or a fight, it's understandable you might choose to keep a few details to yourself.

Understandable, yes, but hardly optimal. You can't come to smart decisions - or even joint decisions - if you don't know what assets and liabilities you're working with and what your partner's goals and priorities are. "You also lose out on the benefit of collective thinking," says family lawyer and financial planner Violet Woodhouse, author of Divorce and Money.

In other words, two heads really are better than one for solving financial problems. The blinders-on approach also makes a crisis more difficult to handle. Should your spouse pass away, you'll be left scrambling to find bank accounts and insurance policies. And if you divorce, you'll be at a real disadvantage in getting your fair share.

Fortunately, the solution is simple: Mostly, what you have to do is talk to each other. Here are the big questions you need to tackle and how to approach them.

What have you got?

You may think you know the basics, like how much your spouse earns and saves, but don't be so sure. When queried about their household's finances, half of the couples in a 2003 study by Ohio State University's Center for Human Resource Research differed by more than 10% in quoting the family's income and by 30% in assessing net worth - mostly because one spouse didn't have a good grip on the other's side of the ledger.

See if you can nail this:

All source of income Just knowing his or her salary (gross and take-home) isn't enough. You should also have a ball-park figure on any bonuses, commissions and other compensation (such as stock options or profit sharing) your spouse receives.

If he or she has a business, freelance or otherwise, you should know its revenue and net income.

Savings and investments Apart from your home, retirement savings are likely to be your spouse's biggest asset. You should have a solid idea of how much is in his or her 401(k) and IRAs and roughly how those assets are invested.

Split 60-40 between diversified stocks and bonds? Excellent. The whole portfolio in company stock and emerging growth funds? Uh-oh.

In addition to your joint holdings, does your spouse have a separate checking, savings or investment account? That's fine as long as you're aware of its existence and have a pretty good idea of how much is in it.

You should both make a list of the financial institutions where you keep your money, plus account and phone numbers. Leave a copy at your office or with your lawyer in case you lose it.

Any debts or obligations This is the thorny one. Your spouse may not want you to know individual charges like the $200 she spent on her BFF's birthday lunch at L'Escargot Très Cher - and that's okay - but she should at least share her credit-card balance.

Also to be included: business loans and ongoing obligations such as child or parental support. All of this material should sit in one or two file drawers in your den or home office where you both have access, rather than in piles scattered around the house or at one person's place of business.

That way, when you sit down together to discuss any kind of financial planning, everything you need to work with will be readily available. Plus, you need to be able to grab this stuff in a hurry if one of you is injured or you have to leave your home because of a natural catastrophe.

Not every husband or wife is eager to talk about or share financial information, of course. So you should be prepared for a bit of resistance, especially if you've been married for years and never expressed interest in these matters before; your spouse may be understandably taken aback, perhaps even worried that you're about to clean out all your bank accounts and run away with your tennis coach.

Getting stonewalled? If so, a little financial forensic work may be in order. Your best source of data is likely to be your joint tax return. Since you have to report interest and dividend income to the feds, your 1040 should reveal the existence of all bank and investment accounts. You may glean information from the business and personal write-offs claimed. (Look on Schedules A, B and D in addition to the 1040.)

"You might learn of an interest deduction for a house you didn't know about," says David Seror, a Los Angeles divorce attorney who has seen it all. It could be an investment property - or a love nest he forgot to mention. If you do find something amiss, it's better to know and deal with the problem before it gets worse. Just ask Silda Spitzer.

You probably already swap a fair amount of information about how you're spending, saving and investing your money in the course of daily conversation.

Amid inquiries about what's on TV tonight or why you bought paper towels when there were still five dozen rolls left, your spouse may drop vital dollops of information such as "We've got to fire the lawn service," which probably means that the bill is soaring out of control, or "Hey, I withdrew $5,000 from my money-market fund to buy 50 shares of Altergistics.com," which means he's been watching too much CNBC.

But such exchanges are not thorough enough to give either of you a clear picture of what's going on with your finances or to nail down goals and your progress toward them.

Do you know when she wants to retire and what kind of lifestyle she's hoping for? Does she know the same about you? Possibly not, to judge by a 2007 Fidelity survey. It asked 503 married couples when they would retire, and 30% got the answer completely wrong.

How much do you know? Tell us.

Since talking about money matters often makes couples tense, New York City psychologist Bonnie Eaker Weil, author of Financial Infidelity, suggests taking regular "walk and talks," which allow you to converse about difficult subjects while enjoying mild endorphin rushes from the exercise.

The promenade, which she says should last about 15 minutes, is an ideal time to indulge your financial fantasies - for example, what you'd each like to do if you won the lottery. Maybe you dream about spending a month in Brazil while your partner wants to collect Chinese ceramics.

You may conclude that you want to rev up your savings or cut expenses to accommodate such items. Conversely, you could decide that times are tough and that the fantasies will all have to wait until little Lulu and Tubby finish college.

Walk-and-talks can make it easier to air problems too, Weil says. Maybe you noticed your joint checking account was looking a bit anemic. "If you ask, they'll usually tell," says Weil. You might find out that your partner spent $3,000 on a case of Doyac 2005 Haut-Medoc instead of putting the money toward a new furnace.

Refrain from immediately jumping down your spouse's throat. "You may not agree about it, but it's important to know," says planner Woodhouse. Being married makes each of you legally responsible for the other's financial mistakes. If your spouse takes out a second mortgage on the house to underwrite a business, you're just as liable to repay the debt.

And if you're not the one filling out your 1040, better make sure you thoroughly review the return before you sign it because the IRS could hold you accountable for any unpaid taxes, even if you subsequently divorce. That's why it's important to reinforce informal talks about money with a more pointed sit-down in which you review each other's savings, checking and investment accounts in detail.

If such a get-together sounds like as much fun as attending a local zoning board meeting, you'll be cheered by the fact that most financial advisers say you have to do it only once or twice a year.

In the real world, marriages break up and people die or become ill. Before you have to face such situations, you should know what you can count on financially to help you through the tough times.

If your spouse dies, what you'll get and how quickly you'll get it depends partly on how your assets are titled. You will gain immediate access to and full ownership of anything that you hold as joint tenants with right of survivorship - your house, probably, and perhaps most or all of your financial accounts.

Your spouse's share of anything that you own as tenants in common is distributed to heirs named in a will. But even if your spouse dies without a will or tries to cut you out of one, you'll still get a good portion of anything he owned since most states don't allow married people to disinherit each other.

Unless you have waived your right to it in writing, your spouse's 401(k) will also come to you, and you may be able to collect a death benefit too if your spouse was vested in a pension plan.

If your husband or wife named you as a beneficiary on life insurance policies or IRAs, you should receive those funds as well. But there's no requirement that a spouse be named as beneficiary on those accounts. So if your husband or wife spouse designated Aunt Mabel instead, you're likely out of luck.

Finally, if you have minor children, you can count on a little help from the government. Social Security provides survivors benefits to children under 18 and to spouses or exes caring for kids under 16.

How much do you know? Tell us.

Divorce is another story. Different states' laws vary wildly. But don't count on getting permanent alimony unless you've been out of the workplace for years raising children. Many courts nowadays are apt to award what's called rehabilitative alimony, a lump sum that's enough to allow you to retrain for a higher-paying job.

What property gets divided? Some states consider everything - "even Grandpa's antique roadster that he gave you before you were married," notes Barbara Glesner Fine, a law professor at the University of Missouri.

Other states include only property acquired during the marriage. A third batch take into account only assets the couple earned; gifts and inheritances are off limits. Those marital assets are then divided equally or "equitably," meaning that the court will weigh the length of the marriage, the ages of the partners, their earnings and other factors.

Effort counts too. Even if you made all the house payments, if your spouse spent every weekend rehabbing the place, he or she will get a share. To find out how your state divides property, consult a lawyer or search online for "divorce" and your state.

You may also be entitled to part of your soon-to-be-ex's 401(k). If the court awards it to you under what's called a qualified domestic relations order, you won't have to pay a 10% early-withdrawal penalty on the money, even if you and your spouse have not reached age 59½.

And if you were married for at least 10 years, you may be able to get Social Security benefits based on your ex's service when you turn 62, assuming you haven't remarried.

Maybe you'll never have to worry about who has the rights to the house, the stock options, the Picasso ashtray and the poodle. But it's better to know than not to know - just in case. In fact, your marriage may be all the stronger for it.

Are you prepared for a financial emergency?

With a recession and rising inflation, it's more crucial than ever to have a six to 12-month living-expense cushion in cash for an emergency. Don't have it? Drop us a line at makeover@moneymail.com. Include your name, age, city, state, marital status, occupation, how much you have in cash savings and retirement savings. Please send a photo of you (and your spouse, where applicable) too

Original here