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Facing the Hidden Betrayal: A Closer Look at Financial Infidelity

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Financial infidelity or financial cheating refers to when one person in a relationship hides or lies about their finances to their partner.

This behavior can harm trust and cause strain in relationships. Sometimes, it might even have legal implications, especially during property settlements in family law disputes.

Various Forms Of Financial Infidelity

Financial infidelity can manifest in various ways, depending on the nature of the deceit and the financial matters involved. Some common forms include:

  1. Hidden Purchases: Secretly buying items or services and not disclosing them to a partner
  2. Concealed Debt: Hiding debts, loans, or credit card balances from a partner
  3. Secret Accounts: Maintaining bank accounts, credit cards, or investment accounts without the knowledge of the other person
  4. Stashed Cash: Keeping physical cash hidden away.
  5. Hidden Assets: Not disclosing assets like property, stocks, or valuable items
  6. Lying about Income: Either understating or overstating one’s income or bonuses to a partner.
  7. Gambling Without Disclosure: Spending significant amounts on gambling without informing a partner
  8. Making Big Financial Decisions Alone: Making large investments, selling assets, or incurring significant debts without consulting or informing the partner.
  9. Hiding Financial Documents: Intentionally hiding or destroying bank statements, bills, or other financial documents.
  10. Using Money to Manipulate or Control: Using financial resources or information to control or manipulate the other person in the relationship.
  11. Faking Financial Documents: Creating false documents to mislead a partner about financial status or activities

It’s essential to understand that the core issue in financial infidelity is not just about money but about trust, communication, and honesty in a relationship. When financial secrets are kept, they can erode these foundational relationship principles, leading to conflict and distrust.

Also read: Polygamy In Australia: 6 Key Facts You Need To Know

The Law 

Financial infidelity can have significant implications, especially regarding the division of property and assets upon separation or divorce. Here’s how the Family Law Act 1975 interacts with instances of financial infidelity:

Full and Frank Disclosure

The Act mandates full and frank disclosure of all financial circumstances in property settlement matters. This means that both parties in a relationship breakdown must provide complete information about their assets, liabilities, income, and financial resources.

Failure to Disclose

If one party hides assets, lies about their financial situation, or otherwise commits acts of financial infidelity, they can face various consequences:

  • The court can make unfavorable orders to the party that failed to disclose.
  • Settlements or orders may be revisited or set aside if they were made based on incomplete or misleading information.
  • Costs orders might be made against the non-disclosing party.

Consideration in Property Division

While the primary factors the court considers in property division are the contributions of each party to the relationship and the future needs of each party, deceit or wastage of assets can be viewed as a factor. If one party has recklessly wasted marital assets or hidden them, it can influence the court’s decision.

Not a Ground for Divorce

It’s essential to note that, under the Family Law Act 1975, the only ground for divorce is the irretrievable breakdown of the marriage, demonstrated by a 12-month separation.

Financial infidelity isn’t a direct ground for divorce, but its consequences can be felt in property settlements and potentially in matters related to children.

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Trust and Best Interests of the Child

Financial infidelity might not directly impact child custody decisions, but the trustworthiness and reliability of each parent can play a role in such determinations. If financial deception is part of a broader pattern of behavior, it might influence the court’s decisions regarding parenting orders.

While the Family Law Act 1975 doesn’t explicitly name “financial infidelity” as a legal term, acts of financial deception can have significant consequences, particularly in property settlement proceedings. Anyone facing such issues in Australia should consult a family lawyer to understand their rights and potential legal implications better.

Also read: Is it Time to Change Your Family Lawyer?

Kennedy & Thorne (2016) FLC 93-757

While “financial infidelity” might not be the primary focus in family law judgments, there have been several cases where non-disclosure or hiding of assets played a significant role. One of the more notable cases related to non-disclosure of financial support is the case of 

The case of Kennedy & Thorne isn’t about financial infidelity in the traditional sense of a spouse hiding assets or lying about financial affairs to their partner. Instead, it focuses on a prenuptial agreement and the complete and frank disclosure of assets. Here’s a brief overview:

  • The couple met online; the husband was wealthy, and the wife was from overseas with very little to her name.
  • The husband had assets worth over $18 million, and the wife had negligible assets.
  • Before getting married, the husband made it clear to the wife that his wealth would be preserved for his children from his previous marriage, and she would not inherit. They signed a prenup (or a “financial agreement” as termed in Australia) shortly before their wedding and a postnup a month after.
  • Her solicitor advised the wife that the agreement was unfair and that she should not sign it. Yet, she went ahead, assuming the wedding would be canceled if she didn’t sign.
  • After the marriage ended, the wife challenged the court agreements, stating they were unfair and that she was under duress when signing them.

The High Court eventually set aside the agreements, highlighting the importance of fairness, proper legal advice, and lack of coercion in such contracts. The case is significant in the context of financial disclosure and the importance of entering into prenuptial and postnuptial agreements transparently and fairly.

However, for cases specifically focused on hiding assets or actual financial infidelity, the details are often embedded within broader family law judgments. In many situations, non-disclosure might be one issue among others in a complex property settlement matter. 

Facing Financial Infidelity? We’re On Your Side.

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