Financial Infidelity and Divorce: It’s Complicated

The legal, emotional and financial needs of couples divorcing due to “financial infidelity” are often complex.

When many people hear that “infidelity” was the reason for a divorce, they automatically assume it has to do with sex. More and more often, however, I see that “infidelity” with money is the reason why marriages are ending.

Where physical infidelity may have happened once, twice, or within a limited amount of time, financial infidelity has probably occurred over an extended period, and has done much greater damage.

Financial infidelity includes such actions as:

– Not paying taxes that your spouse believed had been paid
– Secretly spending money to fund an addiction
– Using a spouse’s Social Security number to open new credit cards, and proceeding to max them out
This type of betrayal usually goes on for years before the unsuspecting spouse wakes up and realizes its extent. Maybe the unsuspecting spouse had a feeling that something was amiss, but he or she did not want to look too closely for fear of having to change the family’s lifestyle. (The financially-dishonest spouse is usually the higher wage earner.)

Whenever the extent of the betrayal is discovered, it is not uncommon that a harsh light will be shone on the relationship and awaken other issues in the marriage.

Whether the financial betrayal is the result of trying to “look good” in the face of an unsustainable lifestyle, or needing funds to feed an addiction, the end result is the same: the divorcing couple is in deep legal, emotional and financial distress.

Financial infidelity is not easy to simply “forgive and forget.” If the couple divorces, they will be dealing with the emotional pain of betrayal and the long-term financial implications that result. Reacting by hiring an aggressive attorney may seem like a rational response, but given the often precarious financial situation these couples are in, it’s often far from the smartest reaction.

More pragmatic couples will let the hurt, shame and anger subside a little before moving forward with the divorce. This allows them to see that – just because trust was badly abused during the marriage and there was little to no transparency around finances – it is still possible to come to a fair and equitable agreement outside of court.

Not only do these divorcing couples need specialized legal assistance (whether in the areas of divorce, tax, and/or bankruptcy law); but they can use coaching to help them work together in spite of the emotional pain; and financial advice to help them clean up the mess and move forward with their divorce – and their post-divorce lives.

 

Andrea Vacca

570 Lexington Avenue Suite 1600 New York, NY 10022 avacca@vaccalaw.com