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Natalie Pace

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Financial Infidelity and the Governator

Posted: 05/27/11 07:20 PM ET

How much money did Arnold Schwarzenegger spend to keep his secret?

Former California Governor Arnold Schwarzenegger and California First Lady Maria Shriver were the quintessential power couple. During Arnold's first campaign for governor in 2003, and throughout the groping scandals that dogged him, Maria stood by her man, saying, "I see every day, an extraordinary human being of great character, who is honest and full of integrity." (Yes, she said this without choking on her words. Did she have a clue at the time that their housekeeper's 5-year old was Arnold's son?)

Being First Lady was a role that Maria visibly delighted in. Each year, from the podium at her sold-out California Governor and First Lady's Conference for Women, Maria welcomed her husband, the Governor of California, to the stage with great pride, listing his achievements and sounding his personal attributes. Maria's conference hosted the most powerful people in the world, including former British Prime Minister Tony Blair, the Dalai Lama, First Lady Laura Bush, Supreme Court Justice Sandra Day O'Connor and First Lady Michelle Obama.

So, how much did Maria know and when did she first discover that her four children have a half brother? (Can we really believe that she just found out this year?) How much did Arnold spend to keep his secret while he was the Governor of California? Will the Schwarzeneggers stay married, despite this scandal, as the Edwards did before them? Do blood, money and power run thicker than cheating and financial infidelity? One thing that is assured, the finances, family accounting, bank accounts and asset ownership will be more clearly defined going forward, whether or not there is a divorce.

The public will likely never know all of the sordid details, as Maria's family law attorney Laura Wasser is best known for keeping her celebrity divorce negotiations discreet. However it is very likely that financial infidelity will be the battle cry. If Maria didn't before, she will now receive a full accounting of every dime Arnold has spent during their 25 years of marriage, so that the attorneys can haggle over what Maria is rightfully owed. Maria will become a very rich woman and, if she is smart, many assets will become hers free and clear.

What is the right level of support that the Schwarzenegger family should provide to Governor Schwarzenegger's not-so-secret son going forward? Maria will be involved in these financial negotiations, since she is part owner of the money being paid out. TMZ reports that Governor Schwarzenegger helped Mildred Patricia Baena purchase a home worth $268,000 in Bakersfield, California and kept her happy enough to deny the paternity, when Baena was approached in May 2011 by the Los Angeles Times. TMZ.com has posted a PDF of "gift" payments to Baeza totaling $65,000 from the Governor's personal bank account, though that is likely a small fraction of the total support Arnold provided for his son over the past 13 years.

Unfortunately, financial infidelity is far more prevalent than most Americans admit. In his book, The Politician, Andrew Young, an aide for Senator Edwards, who initially claimed to be Rielle Hunter's Baby Daddy, outlines years of secret, high society support of Rielle Hunter and her daughter (with Senator Edwards), Frances Quinn. Dalliances can be expensive. Just ask Eliot Spitzer, Newt Gingrich (married 3X), Prince Charles and Senator John Ensign.

Though these may be the best-known examples of financial infidelity, clearly, anytime there is betrayal in the marriage, money is a likely bed partner. One will break your heart. The other can destroy your future. According to the U.S. Department of Commerce, nearly six of 10 children living with only their mother are near or below the poverty line.

As the founder and CEO of the Women's Investment Network, LLC, I have listened to the personal stories of many people who woke up to foreclosure notices on their front door. Some discovered that their partner had purchased real estate, jewelry, vacations or other expensive gifts for a lover, while others suspected but could never find the paper trail. Some spouses gambled away their equity and life savings in the stock or real estate markets without the knowledge or approval of their life partner. Far too many had to start over in the wake of these disasters.

So, how do you protect yourself and prevent your life partner from wiping out your livelihood? Be aware that in the event of a divorce, all of the family assets will be on the table for negotiations, however, those belongings that are clearly "yours" are more likely to end up on your side of the table than those that you have no named ownership in. CPA Mark S. Gottlieb, a respected forensic accounting expert, advises married partners to:

1. Maintain your own retirement account and plan.
2. Make sure your name is on all of your joint investment assets.
3. Review your financial assets, bank accounts, etc. on a regular basis with your partner
4. Review your financial assets, bank accounts, etc. on a regular basis with an independent financial professional and accountant of your own
5. Take responsibility. If your partner loses your money, it is still your loss.

If you are seriously worried about your spouse's spending habits, then you might need to set up your own trust, put your spouse on a tight budget and/or consider a divorce so that you are not responsible for the debt and liability that an out-of-control spouse can run up.

Of course, just like politicians, divorce impacts your social standing with your friends and family. However, even though you might condone some "flings" or mistakes for the sake of the marriage, you should not turn a blind eye to financial infidelity. The Governator, a mega movie star and land mogul, can afford to write some very large checks to Maria Shriver and to the housekeeper/mother of his fifth child. However, don't count on that being the case in your marriage.

About Natalie Pace:
Natalie Pace is the author of http://www.amazon.com/You-vs-Wall-Street-Youve/dp/1593155514/ref=sr_1_1?ie=UTF8&s=books&qid=1259084953&sr=8-1. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit http://www.nataliepace.com/np.php?fxn=home.


 
 
 

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HUFFPOST SUPER USER
April Pells
05:09 PM on 06/09/2011
Regarding his hiding money, does anyone believe that he and Maria discussed every expense? They each have their own considerable wealth; I don't imagine them sitting around the dining room table going over expenses, like regular people. And if he didn't need to discuss where his money was going, why would this be considered "hiding money"?
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HUFFPOST BLOGGER
Natalie Pace
Natalie Pace is the author of You Vs. Wall Street
12:26 PM on 05/31/2011
If you have experienced financial infidelity in a marriage, I encourage you to share your wisdom here. Others need help knowing the warning signs, how to protect themselves and how your marriage survived/thrived/improved as a result of having both partners become more responsible for the family earning/spending and investing.
03:00 PM on 06/02/2011
Do you consider a spouse who refuses to work financial infidelity ? Do you believe there should be legal recourse for such a situation ?
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HUFFPOST BLOGGER
Natalie Pace
Natalie Pace is the author of You Vs. Wall Street
07:12 PM on 06/02/2011
Readers: Have you experienced this? Do you want to weigh in?

Marriage is an agreement between two people to create a family unit. Infidelity of any kind is a betrayal. There are many marriages where the partners divvy up responsibilities, which is different than someone sneaking around behind your back. I've known people who felt that their lazy spouse wasn't pulling their weight in the relationship, and many times the relationship didn't last as a result.
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jf12
Occupying myself
09:49 AM on 06/03/2011
"Refusal to provide material support" is always a grounds for divorce, if it's the man refusing. Even in no-fault states, it is a primary factor in dividing property (and no, it's not 50/50 even by default). FWIW "refusal to engage in marital relations" aka impotency is also a grounds for divorce, but again only when it is the man.
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HUFFPOST SUPER USER
April Pells
05:18 PM on 06/09/2011
Spending habits reflect priorities. When one spouse chooses to spend money on whatever they want out of a joint account, it reflects their belief that their own needs are more important than whatever the couple may need jointly. For instance, my ex-husband used to spend our money on sneakers, cigarettes, and video games (all for him) instead of our rent. Then, he'd take out loans from his mom, and she'd tell me things like, "You know, I don't mind helping you guys out, but I could really stand to be paid back," and this was the first I'd heard of it. He, also, refused to believe this was a problem. This was a big part of why I left him.
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HUFFPOST BLOGGER
Natalie Pace
Natalie Pace is the author of You Vs. Wall Street
09:44 PM on 06/09/2011
Thanks for sharing, April. Money is a big issue in all marriages. How are you using that experience to inform your relationships in the future. Any advice for others (men and women) who are worried that a spouse is skimming and/or borrowing on the side? Did you have financial fallout that dogged you after you left? (Debt collectors, including ex-mother in law?)
10:55 AM on 05/31/2011
Although the former governor and successful actor, Arnold Schwarzenegger, can certainly afford to provide a luxurious standard of living for the son he fathered with former housekeeper, Mildred Baena, under California law he is not legally obligated to do so.

Family Code Section 7540 states that a child born to a woman who is married and living with her husband, who is not sterile or impotent, is conclusively presumed to be the father of that child. The only exception to this rule is found in Family Code 7541 which requires that an action for paternity may be brought under certain circumstances to name another man the father of the child. However, that action must be brought within two years of the child’s birth.
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Randi Susan Klein
LA Family Law Attorney
02:14 PM on 06/03/2011
You analysis is right on the money. However, I don't believe the 7540 presumption becomes conclusive until after the passage of two years, when the time has passed to bring an action for paternity, and to name someone else as the father. Prior to that time, it is a rebuttable presumption.
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HUFFPOST BLOGGER
Natalie Pace
Natalie Pace is the author of You Vs. Wall Street
05:08 PM on 06/04/2011
Randi, If you are keeping track of this, we'd love to hear your legal take on how this story develops. Certainly it seems that Schwarzenegger has a moral right to provide for his son -- considering this secret was something that he probably paid a high price to keep...
11:21 PM on 05/29/2011
LIKE I ALWAYS SAY - "THE TRUTH" IS NOT OPTIONAL;

AND, HAVING SAID THAT, WHAT'S IN THE DARK, WILL COME

OUT IN THE LIGHT. THAT'S A GUARANTEE!!
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Randi Susan Klein
LA Family Law Attorney
05:49 PM on 05/28/2011
California is a no fault state in terms of divorce. That means that Maria cannot try to litigate the issue of Arnold's infidelity. However, she can produce evidence that he made a gift of community property without her consent or knowledge. As example would be the home he recently purchased in Bakersfield for his ex mistress and their love child. If Maria can prove that Arnold used community funds, such as wages, to purchase the Bakersfield home, Maria can move the court to set aside the transaction. The court may also award her more than 1/2 the community assets.

Other examples of making a gift of community property without the consent of the other spouse would be buying expensive gifts, or taking a lover on expensive vacations. While the beleaguered spouse cannot provide evidence that her ex was unfaithful, she can produce evidence that community funds were used to purchase gifts without her consent. Remember, every financial transaction, whether by check or credit card, has an electronic trail.

For further commentary on this point, see my face book business page, "LA Family Law Attorney, Randi Susan Klein." http://www.facebook.com/randi.s.klein/posts/215830458450703#!/notes/la-family-law-attorney-randi-susan-klein/does-no-fault-mean-no-revenge-in-a-california-divorce-the-case-of-arnold-and-mar/218021341555446
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HUFFPOST BLOGGER
Natalie Pace
Natalie Pace is the author of You Vs. Wall Street
07:14 PM on 06/02/2011
Thanks for these tips, Randi! Feel free to contact my office if you wish to provide commentary for use in upcoming articles on this vertical. NataliePace.com.
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Randi Susan Klein
LA Family Law Attorney
12:44 AM on 06/03/2011
Natalie, I will do that. Thank you for the invitation to comment on future articles. I am a family law attorney. I specialize in divorce, spousal and child support, custody and visitation. Please let me know if there is a way I can subscribe to articles on that topic that are posted in the Huffington Post.
11:30 AM on 06/03/2011
Can you expand on what funds would not be considered community in a marriage ?
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Randi Susan Klein
LA Family Law Attorney
01:31 PM on 06/03/2011
I can only make general comments. Examples of community funds would be the wages of either party while married and living together. Another example would be funds from joint accounts that are used for living expenses.
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Randi Susan Klein
LA Family Law Attorney
02:34 PM on 06/03/2011
I see I mis-read your question. You asked for examples of funds that would NOT be community property. An inheritance is not considered community property, whether is it bequeathed before or during marriage. Wages earned AFTER the parties are separated and living apart are no longer community property. Those wages would be the separate property of the wage earner.
01:01 PM on 05/28/2011
Ms. Shriver - I care. Either you truly were kicking and screaming and passively being victimized by your husband (hard to believe as to that being the case) objecting to all of the power and privilege you enjoyed and the money your husband brought to your personal lifestyle or not - especially as a supposed advocate for "women" as the state's "first lady". Which is it? Explain YOURSELF and your deliberate and intellectual role as First Lady and champion for all women, please.

You cannot have it both ways. Although I do believe you are a victim of complicitly and voluntarily putting all of your "eggs" into this one baske in regard to a mortally flawed husband that you chose.
And procreating four children with.

It all matters. And as to the official roles you volunteered for and showed a united front doing so - you cannot bespeech the world for privacy about. Or your children, too. You made it all the business of the public. As you spoke on our behalf. Called out as a proponent of issues - on all of our behalf. As YOU enjoyed a greater personal voice - because of it all.

When all you really are and were is a college educated journalist. All in all. If you want to get "personal".
HUFFPOST SUPER USER
Erinaleks
Architectural Artisan, Free Thinker
08:49 AM on 05/28/2011
Who cares
03:41 AM on 05/28/2011
A woman (and a man) should ALWAYS know all the financial details in a marriage.

ALWAYS.

***My (ex) husband didn't want to handle the finances.
He just wanted to earn money (when he worked) and forget about how it would be spent (after his "allowance").
He never wrote ONE check.
When we divorced, I had all the financial skills and he had none past a basic existence.
09:50 PM on 05/27/2011
Excellent, informative article. Thank you.
08:37 PM on 05/27/2011
Why do people assume that Mildred Baena has been receiving money all these years? Do you really think that a woman who continued to work for Arnold as a maid "day in and day out" after having his baby was aware of how much leverage she really had and still has today? Come on, get real. Baena needs to take Arnold to court to get the support to which her son is entitled.
HUFFPOST SUPER USER
trescher
"You play with dirt, it gets in your eyes"
02:21 AM on 05/28/2011
You are so right. Putting emotions aside, even though he probably gave her SOME money, when it all boiled down she was still the freakin' maid. I'm sure that they had a staff big enough when she retired that she didn't have to clean toilets, but she still did on occasion. Such was the life of Schwarzenneger's baby-mama.........I can't imagine selling yourself so short. If Maria Shriver wasn't such a great person I would say they should do a movie about this. On Lifetime.
03:45 AM on 05/28/2011
I wonder.

I think she worked AND got regular money on the side.
It looks to me like she has been getting child support all along.

BTW....Have you seen her house?
A pretty nice area and not a cheap house either.
I think Arnold helped her with the down payment.

****How much can a maid make anyway?
And how far could her paycheck (only) go in expensive California?
10:59 PM on 05/29/2011
Her house is in Bakersfield (not a wealthy area) and it isn't even paid off. She has a mortgage. A few years ago, her car was repossessed.

If she took Arnold to court her son would get between twenty and thirty thousand dollars a a month in child support. She needs to protect her son and go to court to make sure that he's taken care of. And I wouldn't rely on Arnold to
"do the right thing" because we all know that he is a dishonorable man.