Understanding Financial Infidelity: Its Impact on Divorce and Financial Settlements in Scotland

Financial infidelity can have serious consequences for a marriage and may play a significant role in the decision to divorce. In Scotland, while financial infidelity itself is not a specific ground for divorce, it can be used to establish irretrievable breakdown of the marriage due to “unreasonable behaviour”. If one spouse has been deceptive about financial matters—such as hiding/accruing debt, secret spending, or lying about income—it can be seen as unreasonable behaviour as it may make it intolerable for the other spouse to continue living with them.

Common Examples of Financial Infidelity include;

Secret Debts: If a spouse has incurred and hidden significant amounts of debt, like credit cards or loans.

Hidden Accounts or Assets: A partner keeping secret bank accounts or investments may cause a lack of trust in the marriage.

Gambling or Risky Investments: Spending large sums of money on gambling, high-risk investments, or addictions without the other spouse’s knowledge could be considered unreasonable behaviour.

Mismanagement of Joint Finances: If one partner uses joint funds inappropriately, such as spending savings meant for shared goals (like a house deposit or children’s education

Divorce and Financial Settlements in Scotland

When ‘financial infidelity’ is a factor in a divorce, it can also affect the financial settlement or division of assets. In Scotland, the courts follow the principle of “fair sharing” of matrimonial property, which means assets and debts acquired during the marriage are generally divided equally, unless there is good reason to do otherwise.

However, financial infidelity can sometimes impact this process:

Disclosure of Assets: During a divorce, both parties must fully disclose their financial situation, including all assets and debts. If a spouse has hidden assets or accumulated secret debt, this can come to light during the divorce proceedings, and the court may take this into account when dividing assets.

Impact on Financial Settlements: Courts can consider the conduct of the parties when making decisions on the financial settlement if such conduct has adversely affected relevant financial resources.  While the focus is on a clean break and fair division of assets, extreme cases of financial misbehaviour, such as hiding assets or accumulating secret debt, may influence the court’s decision, especially if it results in one spouse being significantly disadvantaged. The precise attitude the court adopts will vary on a case by case basis

Steps to Take If Financial Infidelity Is Discovered

If financial infidelity is discovered and divorce is being considered, here are the recommended steps:

Seek Legal Advice: Consult a solicitor specialising in family law to understand how this may impact the divorce process and what options are available for financial settlement. No one should feel stupid, or guilty, or embarrassed, because it’s very common and doesn’t just relate to hidden debt, that’s about finances across the board. It is not at all unusual for one person in a couple to know a lot more about the ‘marital books’ than the other.

Gather Evidence: If possible, gather evidence of the financial infidelity, such as bank and credit card statements or loan agreements.

Financial Disclosure: Both parties should provide full financial disclosure during the divorce process and steps can be taken in the context of a court action to compel a reluctant spouse to provide information. Very often financial infidelity, or the extent of it, is not discovered until a divorce is already under way, and couples have to disclose their spending to each another. A lot of people don’t realise this is non-negotiable and that secrecy in either direction –whether that is hiding earnings, building up a savings pot with the intention of separating or recklessly incurring debt –is equally unwise since it will come out in the divorce.

If you find yourself considering a divorce, our expert and friendly family law team are here to guide you through all aspects of divorce, providing support to minimise stress and upset.