Financial infidelity is more than just hiding purchase receipts or failing to mention the new set of golf clubs you bought last week. It takes many shapes and forms and can cut right to the heart of a relationship. Financial infidelity, whether through acts of omission or commission, can destroy trust in a relationship and have long-term detrimental effects for any couple. In this article, we explore the different types of financial infidelity.
Lying about your financial past
Very often, the first instance of financial infidelity in a relationship is where one partner enters into the relationship without fully disclosing his past money problems. This could involve him hiding the extent of his indebtedness, or not revealing financial commitments that he has to an ex-spouse or children from a previous relationship. A person could also hide the fact that they are an unrehabilitated insolvent, bearing in mind that an unrehabilitated insolvent has limited contractual capacity and his rights to fixed property are limited, and this can affect your joint financial planning as a couple.
Gambling or addictions
Whether your partner bets on sports, roulette, poker or slots, whether online or in a casino, a gambling addiction can have devastating consequences for any couple. Besides for racking up debt, a gambling addiction can lead to lies, job loss, financial despair, crime and the disintegration of the family unit. A gambling addiction is a progressive from of addiction which may start out as recreation but which often leads to out-of-control behaviour. As an impulse-control disorder, many gambling addicts suffer from depression, migraines, and suicidal thoughts, which only serve to add to the family’s woes.
Spending in secret
While hiding the odd small expense may be seemingly innocuous, this form of infidelity can gradually become more regular and involve more expensive purchases. A partner may start out not disclosing a clothing purchase, then ‘forgetting’ to mention a lunch-out with friends, followed by secretly purchasing an expensive piece of jewellery on credit. All these single acts of infidelity, when added together, can have a significant impact on the couple’s finances and may lead the innocent partner to wonder where their money goes every month. This form of secret expenditure can also involve a ‘rounding down’ where one partner deliberately deceives the other partner as to the true cost of an item, or the misallocation of funds where money intended for groceries is illicitly used to purchase something else.
Lying about income
Financial infidelity may also involve one partner lying about their income either by exaggerating the amount that they earn or by leading their partner to believe they earn less than they actually do. Very often, where one partner has a spending problem, the other partner will lie about what they earn and even go so far as to hide bonuses or commissions for fear that their spouse will blow their earnings.
Hiding bank accounts
Hiding bank accounts or investments from your partner is another form of infidelity which can have crushing consequences if discovered. This often happens where a person feels uncertain about the future of their relationship or where they feel their partner is over-controlling when it comes to money. Where a person has a spending problem that they wish to conceal the extent of, a secret credit card or bank account is very often used for transactions.
Lending money to family or friends
A very emotive form of financial infidelity, lending money to family members or friends without your partner’s knowledge can cause untold tensions amongst the extended family. Very often one partner has strong feelings about not lending money to friends or family, while the other feels obliged to provide financial assistance if they have a friend or family member in need. Where a couple fails to see eye-to-eye on the issue of lending money, one partner may feel they have no choice but to go behind their partner’s back. Lending money to friends and family is something that a couple should discuss and agree upon at the outset of the marriage, as these types of ‘soft loans’ can have devastating financial and relational consequences.
Discussions personal finances with family and friends
Talking to family, friends and colleagues about your personal finances should really only be done with your partner’s consent. Finances are highly personal, and it is only understandable that a partner would feel aggrieved if the other partner discusses your private affairs with others. Where one partner discloses details regarding the family’s personal finances to friends, family members or colleagues, the other partner can feel betrayed, vulnerable and hurt.
A terrible form of infidelity which can have devastating financial consequences involves one partner cancelling insurance cover, medical aid or short-term insurance without the other’s knowledge. If a couple finds themselves in financial distress, a partner may take it upon themselves to cancel or suspend much-needed cover in order to survive financially. Unfortunately, this deceit is often only discovered when the unsuspecting partner tries to claim for an insurable event. Where life cover has been cancelled, the couple may be required to be re-underwritten when trying to secure cover in future, and this could lead to increased premiums. Similarly, if a couple’s medical aid membership lapses for 90 days or more, they may be subject to waiting periods, exclusions and late joiner penalties when re-joining at a later stage, only adding to their financial difficulties.
Lying about your legacy
Sadly, some partners commit financial infidelity by misleading their spouses with regard to the contents of their Will and beneficiary nominations on their life policies. An unsuspecting spouse may be led to believe that her husband has provided adequately for her in terms of his Will and estate plan, only discover on his passing that no financial arrangements have been made for her or their children. If there are assets in the estate, this can lead to expensive litigation and claims for maintenance against the deceased estate.
Setting up sham trusts
Hiding assets in a sham trust is another form of infidelity and is often undertaken where a divorce is looming. In order to ensure that his spouse does not share in certain assets in divorce settlement, a partner can donate or sell assets to a trust which he has set up for the sole purpose of hiding assets. From a legal perspective, our law is of the view that trust property should not be considered part of a spouse’s estate for the purposes of dividing assets on divorce. However, where there is misuse or abuse of a trust, the court can seek to determine whether the spouse is using the trust a ‘sham trust’ by looking at whether the entity is a trust in the real sense, who controls the trust property, when the trust was created, and what the intention of the founding donor was when creating the trust.