What is Financial Infidelity?
What is Financial Infidelity?
When finances are combined, hiding financial information from each other and/or secret spending is an act of financial infidelity. It could manifest as excessive credit card spending, portfolio mismanagement, hiding purchases, having a secret bank account, spending marital money on extramarital affairs, or lying about the amount of income earned or debt that is owed. It’s a deception about something related to finance.
The National Endowment for Financial Education reports that two in five people who commingle accounts admit to committing financial infidelity. Over 39% admit to hiding a purchase, bank account, statement, bill, or cash from their partner/spouse. And about 21% admitted to lying about finances, amount of debt owed, or amount of money earned to a partner or spouse.
Why does this happen? This spending may be an act of rebellion by one spouse who feels controlled by another spouse, then they may feel ashamed of the deception and try to hide it. There could also be a fear of disapproval after finances have been discussed and agreed on.
Financial infidelity plays a role in the reason many couples get divorced. It can also play a role in the division of marital assets in a divorce case.
If you are divorcing and you think it is a possibility that your spouse is hiding assets from you then you should wait to divide the assets until the issue is resolved. Your CDFA will work with your divorce attorney and closely examine every line of the bank statements and other financial documents looking for irregularities, things that have not been disclosed and evidence that your spouse was spending the marital funds improperly.
Some states consider certain types of financial infidelity “marital waste”. The courts call this dissipation of assets and is defined as, “the intentional destruction or depletion of marital assets by one spouse, which would otherwise be split between the couple during divorce proceedings”. There should be a tracing of what was spent without the other spouse’s knowledge and a reimbursement on the spent value that could be legally required.
If you are planning on filing for divorce, you should investigate your spouses' spending. If you believe you have a claim for marital waste, you must prove that the spending occurred during the marriage and was not for the benefit of the family or marriage. If you suspect or know this is happening, you should contact a divorce professional who can give you guidance. Attorney’s often want you to bring a balance sheet, an accounting of your income and expenses and a tax return to your first meeting, this is where a Certified Divorce Financial Analyst® can assist you.
Sandbox Financial Partners has a Divorce Consulting Group with two experienced financial professionals with the CDFA designation to help - click here to learn more.
https://www.nefe.org/news/2021/11/2-in-5-americans-admit-to-financial-infidelity-against-their-partner.aspx
https://www.levidivorcelawyers.com/articles/2020/november/what-is-marital-waste-/