Infidelity – how do you overcome it when it’s not a person?

Leisa Toomey 2012As a family lawyer I have seen what Sexual Infidelity can do to a relationship.  However, wounds heal and people move on with their lives.  But be warned, there is another type of infidelity that you may never recover from if it is not discovered in time.

Financial Infidelity is a relatively new term coined to describe the activities of a partner who is hiding the real financial picture from you.

It comes in many guises but in its simplest form it could be anything from secret shopping to having secret credit cards.  However, at the other end of the scale it could be gambling debts or a business venture that has gone bad – and it could be eating away the equity you have in your home – and all without your knowledge.

It appears we all expect honesty from our partners, but a survey by Harris Interactive of 1796 people aged between 25 and 55 says, whilst we might expect it, we don’t always give it.  According to the 2005 survey, 29% of people in a committed relationship admitted to lying to their partner about their spending habits. And it appears that women have more to hide than men with 33% of women saying they had something to hide as opposed to 26% of men.

As one would expect, 96% of those surveyed believed that it was the responsibility of both partners to be completely honest about financial issues, with 24% believing it was more important than being faithful.

Lying about the price of a pair of shoes is one thing.  Lying about the financial losses of a company is another. Francis* came to see me after discovering the business her husband had set up was actually in liquidation, with debts in excess of $50,000 and an overdraft of $20,000.  She had no idea the company was in trouble as he had told her everything was fine.  Her husband had genuinely tried to make a success of it but once he started borrowing to stay on top, his problems just got worse.  Francis was in turmoil as she has felt betrayed by her husbands’ actions. “Had he come to me to say things were not going well, we could have worked it out together” she said.  By not involving me he has exposed me to the debt and not treated me as a valued partner in this relationship. Sadly, the marriage dissolved, along with a significant portion of their savings.

The bottom line is that whilst lies may start off small, they can quickly take on a life of their own which only leads to bigger problems.  The best solution is to be honest about your actions as the truth will eventually surface anyway.

Infidelity – of the financial kind

Leisa ToomeyFinancial Infidelity is the new phrase for when one spouse secretly spends family money or creates debts without the knowledge of the other spouse. This can be anything from secret shopping, gambling addictions, secret credit cards or compulsive ebay purchasing.  Such spending is normally funded from family savings, hidden credit or store cards or even from using the redraw facility on the home loan.

Essentially this, for many people, is a breach of trust which often results in separation. With separation comes property settlement and divorce.  It is still common in relationships for one party to be the “financial controller” and in these relationships it is particularly easy for such behaviour to occur.   Sometimes this is one of the causes of a separation.  If the financial infidelity is not discovered until after separation it is commonly referred to as a STD or “Sexually Transmitted Debt”.

As a general rule any spending during the relationship will be born equally by the parties regardless of who did the spending and who did the earning.    There are ways you can protect yourself before the event such as by having a carefully drafted “pre-nuptial” (before marriage) or “post-nuptial” (during marriage) financial agreement.

Parties who fall victim to financial infidelity need to take steps, pre and post separation to protect and preserve the remaining family assets.  Sound legal advice early on or even prior to separation can give a person tools and techniques to protect assets and discover financial infidelity before there is nothing left to divide.

Some hints and tips to uncover and avoid financial infidelity:

  • Become actively involved in family finances;
  • Watch the mail – be aware of sneaky behaviour eg opening mail in private;
  • Go through the filing cabinet – become aware of what the family finances consist of;
  • Get on internet banking and regularly check statements and transaction histories;
  • If you discover financial infidelity – keep copies of the evidence it may just come in handy in your property settlement;
  • Change permissions on redraw facilities and credit cards to restrict spending limits;
  • Protect savings by creating an account with limited access – eg passbook only;
  • If it is necessary to preserve funds, transfer them to an account that can’t be controlled by the irresponsible party.
  • Seek legal advice and counselling.