Financial Infidelity: How It Can Impact Your Divorce Settlement

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Divorces are never easy, and when trust has been broken, they can become even more complicated. Have you recently discovered that your spouse has been hiding financial information or making secretive transactions? If so, you may be dealing with financial infidelity—an issue that not only breaks trust but also has significant repercussions on your divorce settlement. 

Financial infidelity can feel like emotional cheating, but with monetary consequences that impact your future. Whether it’s secret credit card debt, hidden assets, or large unexplained expenditures, understanding financial infidelity and its influence on divorce proceedings is crucial to protecting your financial well-being. 

What Is Financial Infidelity? 

At its core, financial infidelity occurs when one spouse hides financial information or makes financial decisions without the other spouse’s knowledge or consent. Unlike regular disagreements about spending habits, financial infidelity involves a breach of trust through deception. 

Common Signs of Financial Infidelity 

  • Hidden bank accounts or credit cards 
  • Secretive behavior around financial records 
  • Large unexplained cash withdrawals or purchases 
  • Sudden changes in spending habits or financial control 
  • Accumulation of debt that wasn’t disclosed 

Financial infidelity might not be as visible as emotional indiscretions, but its impacts often cut deeper, leading to mistrust, arguments, and, eventually, divorce. 

How Does Financial Infidelity Affect Divorce Settlements?

When financial deception comes to light during divorce proceedings, it complicates key processes like property division. Colorado is an equitable division state, meaning marital assets are divided fairly (though not necessarily equally). If financial infidelity is uncovered, the court may adjust the settlement to account for the dishonest spouse’s actions. In addition, Colorado allows for a “5-year look-back” period post-divorce, which allows a party to seek a re-allocation of assets and debts in a divorce if they discover a material misrepresentation or omission of financial information within five years of the final decree, even if the divorce is already finalized. 

Examples of How It Can Impact Settlements 

  • Hidden Assets: If one spouse is found to be hiding funds or property, the court may award a larger portion of the disclosed assets to the other spouse. 
  • Debt Accountability: Secret debts acquired through reckless spending, gambling, or other activities may be assigned to the spouse responsible for them. 
  • Reduced Trust in Negotiation: Financial infidelity can erode trust, making it harder to reach amicable agreements during mediation. 

Types of Financial Infidelity 

Financial deceit comes in many forms, each affecting the marriage and divorce process differently. Here are some of the most common types: 

Hidden Accounts or Assets 

Creating hidden bank accounts or transferring money out of joint accounts to obscure wealth is a classic form of financial infidelity. This is often done to hoard money for personal use or prepare for life after divorce. 

Secret Debts 

This includes racking up credit card debt, gambling losses, or other financial liabilities without the knowledge of the other spouse. The betrayed spouse may unknowingly share responsibility for these debts unless the court rules otherwise. 

Misuse of Marital Funds 

Using marital money for personal benefits, such as funding an affair, lavish gifts, or unrevealed hobbies, can be considered dissipation of marital assets. Courts often adjust property division to account for this behavior. 

Undisclosed Income 

When one spouse earns money or receives bonuses and intentionally hides it from the other, it impacts both the marital finances and the divorce proceedings.

What to Do If You Suspect Financial Infidelity 

Suspecting financial infidelity can be overwhelming, but there are steps you can take to protect yourself. 

Look for Red Flags 

Pay close attention to any unusual financial changes or behaviors. Missing bank statements, secretive actions around finances, or significant drops in the household budget could all be warning signs. 

Gather Evidence 

If you suspect financial deception, start collecting evidence. Save bank statements, credit card bills, tax returns, and any suspicious receipts. Documentation is key when addressing financial infidelity in court. 

Consult a Divorce Attorney 

A seasoned Golden, Colorado divorce attorney can help identify hidden assets or mismanagement of marital funds. They can advise on how financial infidelity will impact your settlement and what actions to take moving forward. 

Consider Hiring a Forensic Accountant 

For complex cases involving extensive financial deceit, hiring a forensic accountant can help uncover hidden assets, evaluate suspicious transactions, and provide evidence to support your case. 

How Colorado Courts Treat Financial Infidelity 

Colorado operates under a “no-fault divorce” law, meaning the reasons for a divorce—such as financial infidelity—don’t directly impact the decision to dissolve the marriage. However, the financial misconduct caused by infidelity can influence property division. 

Dissipation of Marital Assets 

Courts in Colorado take dissipation claims seriously. Dissipation refers to the misuse or waste of marital assets for purposes unrelated to the marriage. If proven, courts may adjust the property distribution to compensate for the financial losses. 

Legal Recourse for Deception 

If your spouse is caught hiding assets or debts, the court may impose penalties, such as awarding you a larger share of the marital estate or holding your spouse accountable for the concealed liabilities. 

How Your Divorce Can Help Address Financial Infidelity 

A divorce provides the legal framework to uncover and address financial infidelity. Your attorney can use tools like subpoenas, depositions, and document production requests to expose hidden assets or debts. 

Protecting Your Financial Future 

Divorce ensures that marital assets, including previously hidden ones, are fairly divided. It also helps shield you from taking responsibility for your spouse’s secret debts. 

Accountability 

The discovery of financial infidelity during divorce proceedings holds the deceptive spouse accountable for their actions. This can lead to consequences like a larger settlement for the betrayed spouse. 

Finding the Right Legal Support 

Divorces involving financial infidelity are complex. Protecting your financial interests requires knowledge, strategy, and thorough preparation. That’s where The Drake Law Firm comes in. 

At The Drake Law Firm, we understand the challenges financial infidelity brings to a divorce. Our dedicated team works to uncover hidden assets, scrutinize financial records, and ensure you receive a fair settlement. 

If you’re ready to take the next step, contact us today for a consultation. We’re here to help protect your future.

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