Do you keep financial secrets from your significant other?
A survey by the credit tracking company Experian states that 1 in 6 newlywed couples keep financial secrets from each other.
Financial secrets include hidden bank accounts, excessive spending habits or lying about debt.
Family law experts state that this so-called ‘financial infidelity’ can hurt a couple’s relationship as much as a sexual affair.
In the event of separation, an issue may arise whereby you have contributed more financially to the mortgage, whilst your partner may have been less prudent with their money.
Does the Court recognise financial contributions in property settlement?
The Court recognises financial contributions when it comes to dividing the property pool.
For the frugal partner to receive greater recognition by the Court as to their larger financial contribution, they need to show that their former partner spent money in a way that is ‘wasteful’.
This usually involves cases of alcoholism, gambling or other addictions.
However, even if the other was proved wasteful, it is unlikely the thrifty partner would see a dollar for dollar recognition of their own greater financial efforts.
Can a Financial Agreement help?
A financial agreement is an agreement between de facto, engaged or already married couples, made before, during or after the duration of the relationship.
Family law experts set out the division of the couple’s assets, financial resources and liabilities should they separate and constitutes a Contract between the couple to the relationship.
However, a financial agreement is likely to be set aside in the instance of a significant financial secret.
This can include if a spouse has not disclosed a bank account – particularly if the account had a significant amount of funds at the time of entering into the Agreement or, currently, still has a large amount of money.
This is because parties to a Financial Agreement enter based on their knowledge at the time of their current financial positions.
Due to non-disclosure or fraud, an agreement can be set aside.
In the case of constructing a financial agreement to dictate certain financial terms of the relationship such as the proportions of payment for mortgage or utilities bills, family law experts say that such an agreement will be impractical.
This is because enforceability is difficult to control. Parties may find themselves in unforeseen circumstances, such as unemployment, where they no longer have the capacity to pay.