Money Matters in Ongoing Marriage Law
posted by Alicia Kelly
Married life is characterized by a sharing norm. As I described in an earlier post, spouses commit to and in fact engage deeply in sharing behavior, including a shared family economy. Overwhelmingly, spouses pool economic resources, including labor, and decide together how to allocate them to benefit the family as a whole.
In addition to its affects in the paid labor market (see my last post), sharing money matters inside a functioning marriage. It shapes the couple relationship as well as each partner individually. Research shows that in an ongoing marriage, money is a relational tool. For example, making money a communal asset is a way to demonstrate intimacy and commitment, and that can nurture a couple’s bond. Yet, in some circumstances, an assignment of resources to just one spouse can also be understood (by both partners) to be appropriate and deserved—a recognition of the individual within a sharing framework. Conversely, it is also possible that spouses’ monetary dealings can undermine individual autonomy and the relationship as well. For example, one person might exercise authority over money in a way that disregards the other. Accordingly, power to influence financial resource allocation within the family is important for individual spouses and for togetherness.
It becomes a special concern then, that sharing patterns in marriage are gendered. As highlighted in my previous post, role specialization remains a part of modern intimate partner relations. Particularly true for married couples, men continue to perform more as breadwinners, and women more as caregivers. As a result, women tend to have reduced earning power in the market. How does this market asymmetry translate into economic power at home? Happily, in a significant departure from the past, a majority of couples report that they share financial decisionmaking power roughly equally. Indeed, most married couples today endorse gender equality as an important value in their relationship. However, in a significant minority of marriages, spouses agree that husbands have more economic power. For some couples then, a husband’s breadwinning role and/or perhaps his gender, confers authority in contentious money matters.
How should law governing an ongoing marriage respond to these sharing dynamics? Consider this hypothetical fact situation. A husband has a stock account from which he plans to make a gift to his sister who he feels really needs the money. The husband suspects that his wife would not approve of the gift. Even though the wife too loves the sister, she believes the sister is irresponsible with money. Let’s assume that the money in that stock account was acquired while the parties were married, and that it came from the market wages of one or both of the spouses earned during marriage. It was a product of the couple’s shared life. Does contemporary law allow the husband to give his sister the gift without her consent? Without even telling her? How should legal power over the money be allocated?
A surprise perhaps, the law in most states is that the husband can give away the stocks without the consent or even knowledge of the wife, and she will very likely have no recourse, even if they divorce. This is so because perversely, spousal economic relations law in the forty-one “separate property states” simply ignores the marriage altogether. Ownership is based on formal title, with a default rule of individual acquisition. (Ironically, the title determines ownership rule has been partially abandoned in divorce law, and to a lesser extent in inheritance law, but still dominates intact marriage law.) As it stands now, the titled spouse is unilaterally empowered to dispose of an asset that should be considered co-owned with the other.
As I have developed in an article (and am continuing to explore in other projects), my view is that this approach is backward and should be replaced with an actualized joint property regime for marital wealth. Basically I argue for an intensified and expanded community property law approach (that for some transactions functions more like a tenancy by the entireties), grounded on an explicitly theorized foundation. I recommend that marriage should be conceptualized in law as a distinctive partnership of equals for a shared life that includes mutual economic and non-economic contributions as well as joint life-planning and resource-allocation decisions. This sharing framework reflects and facilitates communal goals and behaviors chosen in married life. But it also draws attention to the vulnerability interdependence recurrently produces, offering protection for both individual and joint interests. Key for working against gender hierarchy, the equality standard helps level the economic playing field as couples negotiate resource allocation within the family.
Under my model, both husband and wife are equal co-owners of the stock account. The joint and equal property ownership rule recognizes the sharing process in marriage and equally values whatever kind of contributions spouses make, including both market work and unpaid caregiving work. Additionally, the spouses must collaborate and consent regarding a major transaction like the gift to the sister. (Third party actors, primarily financial institutions, would serve as key enforcers of the mutual consent requirement, by requiring, for instance, two signatures for certain withdrawals, mitigating the opportunity to monopolize joint wealth). This is needed to provide a safety net against the risks sharing inevitably brings. At the same time, operating in the background of spousal negotiations, the rule evenly distributes legal power over the resource. A transfer like the gift potentially affects each spouse individually, as the transfer would concretely diminish wealth to which each partner has a claim. Also crucial, the consent requirement would give each spouse a voice in the decision over what to do with jointly owned property. In addition, allocation of financial decisionmaking power could affect the spouses as a couple and the family unit more broadly. Not surprisingly, having to reach agreement is a more demanding process than unilateral decision making, and may well trigger or reveal conflict. Yet research suggests that sharing control over money is good for marriage. A large-scale study found that “when couples do take the time to share control over money management, they seem to have happier, calmer relationships.” A recurrent collaborative decision-making process marks and augments the communal experience.
Many thanks to Concurring Opinions for hosting me and for the opportunity to dialogue his past month.