Financial Infidelity and Divorce: What You Need to Know

April 18, 2023

When going through a divorce in Illinois, understanding your financial rights is crucial. This means knowing what assets you’re potentially entitled to and ensuring everything is on the table during negotiations. Hiding assets during a marriage or divorce is known as financial infidelity.

Separate vs. Marital Property: What’s Yours?

Illinois law divides your belongings into two categories:

  • Separate Property: What you owned before marriage or inherited during it. There are some additional categories as well.
  • Marital Property: Anything acquired during the marriage, even if it’s only in one person’s name unless a legal exception applies. This includes things like houses, cars, investments, and even retirement accounts.

Understanding this distinction is crucial, as marital property is typically subject to division in a divorce. However, there are exceptions – like gifts specifically given to one spouse.

Financial Infidelity

  • Financial infidelity isn’t about cheating on your spouse with another person; it’s about cheating on them with money. It’s a breach of trust that can be just as devastating as a traditional affair.
  • Simply put, financial infidelity is when one spouse hides or misrepresents financial information from the other. This could mean secret bank accounts, hidden debts, or even major purchases kept under wraps. It’s a form of deception that erodes the foundation of trust and financial partnership that’s essential to a healthy marriage.
  • In Illinois, financial infidelity can have significant consequences in a divorce. Hidden assets can lead to an unfair division of property, and a spouse who has been financially deceived may be entitled to a larger share of the marital estate.

Separate property given to the marriage

 

There is a third type of property, which is separate property that has been given to the marriage. The best way to explain it is an example. Bob buys a house in 2000. Bob marries Sally in 2008. From 2008 through 2021, Bob and Sally lived in the house. Sally puts her paycheck into the joint account that is used to pay the mortgage and keep the house nice. Bob has gifted the marriage the house, and a court might say all or some of the value of the house is marital. How the court decides this is very nuanced.

Financial Transparency is Key

To ensure a fair settlement, both you and your spouse must be transparent about your finances. This means:

  • Full Disclosure: Honestly list ALL assets and debts, even if you think they’re separate property.
  • Requesting Documentation: Ask for bank statements, tax returns, and other financial records to verify your spouse’s disclosures.

Remember, hiding assets can have serious legal consequences!

Check Your Credit Report (and Keep an Eye on Joint Accounts)

During your divorce, it’s wise to check your credit report. You can do this for free at places like Credit Karma. This can help you:

  • Identify unknown debts: Were credit cards opened in your name without your knowledge?
  • Assess your financial standing: Understanding your credit score is important as you move forward.
  • Protect Yourself: Close joint accounts and remove your ex-spouse as an authorized user on your credit cards.

Don’t Forget About Debt!

 

Debt is considered a marital asset, just like savings or property. Make sure all debts are disclosed and addressed in your divorce settlement. Failing to do so could leave you responsible for debts you didn’t even know existed.

Honesty is the Best Policy

 

While it might be tempting to hide assets, it’s never the right move. In the long run, honesty will protect you, your finances, and your peace of mind. Plus, an experienced attorney can help you navigate complex financial issues and ensure a fair outcome.

Need Guidance During Your Divorce?

I’m here to help. Even if financial infidelity has happened, if you can be honest with each other and work through the division, I would love to help make your division into your divorce paperwork. Reach out through my website or call my office. Let me help you move to your independent financial future.

Disclaimer: This blog post is intended to provide a general overview and is not a substitute for legal advice tailored to your individual needs. No attorney-client relationship is established by reading this post. Always consult with a qualified attorney to discuss your specific legal concerns.