6 Financial Red Flags To Look Out For In a Marriage
It’s no secret that in a marriage, women are frequently in the weaker financial position.
A recent YouGov study found that one in three women in relationships is financially dependent on their partner.
Thanks to the gender pay gap, career sacrifices for childcare and numerous other issues, women often have less in the bank than their husbands. This means we don’t have total financial independence, even when we work full time.
Despite this, so many of us are in the dark when it comes to our joint finances – and that can be a real problem.
If you’re not fully financially independent, your partner’s spending habits and attitudes to debt could have a real impact on your life. And, with the rise in problem gambling in the UK, (especially among men), it’s more common than you might think to find yourself a victim of what is known as ‘financial misconduct’.
This disproportionately affects women, who can suddenly find that their partner has secretly gambled savings, borrowed excessively or spent recklessly. So, what are the financial red flags in a relationship?
I spoke to family law experts Trethowans to find out more and get some reassurance on the help that’s out there for women facing financial misconduct.
Knowledge is power
I can be guilty of burying my head in the sand on the topic of money and I’m not the only one. Despite the emphasis on equality in relationships, women can still be disengaged when it comes to joint finances.
According to Laura Bell, Senior Associate at Trethowans, this can mean not knowing where you stand or what you’re entitled to when a relationship breaks down:
………“Sadly, we sometimes find that women don’t often understand the true state of their finances as a couple until it’s too late. This may be because their husbands tend to ‘look after’ the finances, or their husbands run their own businesses and the financial position may not be readily available to understand.
However, all is not lost if you do feel a little in the dark. In the event of a separation, both parties are asked to provide full financial disclosure – this could be 12 month bank statements, pension statements and even business accounts.
This is our starting point and enables us to understand whether we have the full financial picture or if further investigation is needed.”
Why are we so reluctant to discuss finances?
Is it old-fashioned awkwardness surrounding money? Maybe it comes down to not wanting to imagine the worst-case scenario. But are any of these good enough reasons not to be financially aware?
………. “No one enters a marriage assuming they’ll one day be splitting up – but if it does happen – you can be so much better protected if you know your financial situation.
.Whatever the reason, ensuring you have an understanding of your joint assets and financial circumstance, is never a bad thing.”
Facing up to misconduct
If the advice from Trethowans is a little bit of a wake up call (it was for me) – then brace yourself because it can get worse. I asked Laura what actually counts as ‘financial misconduct’ and what happens if you’re a victim of it:
………“The issue of financial misconduct is by no means clear-cut. Examples of what might be considered financial misconduct in marriage could be extravagant and unjustified spending, excessive gambling, spending on unsavoury items or trying to place the matrimonial assets beyond the reach of the other party.”
Hopefully, this never happens to you. But if you were to find this kind of destructive behaviour in your marriage, you might be surprised to learn that the Court will not necessarily be sympathetic:
……….“Separating is an emotionally charged time, particularly when either party feels they’ve been ‘wronged’. We are frequently asked whether one party’s financial ‘misconduct’ will be reflected in a financial settlement upon divorce.
However, on the whole, the law is slow to recognise financial misconduct. It can be taken into consideration but tends to be the exception, not the norm.”.
Wising up to the warning signs
While it’s hopefully quite unlikely that your other half is spending thousands without you knowing – being more financially savvy can only be a good thing. This is not about being unduly suspicious, it’s about being fully informed of your financial situation.
I asked Laura how to be more financially aware and minimise the risk of something going wrong:
……….“Firstly, it’s important to know the warning signs. In our experience these tend to be:
– A partner is secretive about details relating to their finances.
– Excessive spending by a partner, with not a lot to show for it.
– Significant “gifts” being made to friends or family.
– Making claims of there being a sudden depreciation in property value.
– Not being able to offer a comprehensible explanation in relation to any change in assets.
– Where there is the operation of financial control – not giving you visibility to assets, or only providing a monthly ‘allowance’ to spend.
Try to have an honest conversation before reaching any firm conclusions.
While it’s not always easy for couples to talk about money, attempting to have this discussion could clear things up.”
Consider whether your partner is willing to engage in talking about your joint financial circumstances before assuming the worst.
How to protect yourself
If you are concerned about any financial red flags in your marriage, there are steps you can take to protect yourself.
Check the paperwork
If you share any joint bank accounts, make sure that you have access to the online banking facilities and regularly check the statements.
Take steps to be certain that there are no undisclosed assets or liabilities in marriage – make sure there is transparency with regards to your finances.
Get an Accountant
If you suspect that there are hidden assets, consider instructing an accountant to conduct a forensic exercise (especially in relation to business accounts, which may be particularly difficult to decipher). This will ensure you can fully understand the figures that are being presented.
Do a Credit Check
You can undertake regular credit checks online (through sites like Experian) to see if this flags anything of concern.
What are the legal options?
1. Are you are worried that there are properties being sold, and the net proceeds of the sale are being syphoned off?
There could be options such as placing a “Matrimonial Home Right” or “Unilateral Notice” over the title to the property so that potential buyers are warned of your interest in the property and this can also delay a sale.
2. You can apply to the Court to “freeze” assets so that they are not depleted further.
3. Consider whether an application for a Legal Services Payment Order (LSPO) would assist.
This is an Order for one party to make a payment to the other in respect of their legal advice. Typically this Order is made when one party does not have the same financial means as the other, and it prevents them from being disadvantaged by not having access to legal advice.
Finances and the future
It’s reassuring to know that experts like Trethowans are out there to support women. And after speaking to Laura, it definitely feels like time to pull my head out of the sand. For too long I, and many other women, have had a disconnected relationship with finances and it’s time we ended that.
While a lot of the advice discussed may seem like ‘this could never happen to me’, it does highlight why women really need to know their full financial situation.
I’ll be putting myself on the road to becoming financially savvy, who’s joining me?
Ps. If you’re going through a divorce or separation, you can also check out Trethowans’ free podcast, The Candid Divorce Lawyer, available now on Spotify and all your favourite podcast platforms.
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