Financial Abuse: The Hidden Factor in Many Divorces

In some of our recent Blogs, we’ve discussed the growing legal recognition of Intimate Partner Violence (IPV), including the Supreme Court of Canada’s recent decision in Ahluwalia v. Ahluwalia. One important point emerging from that case is this: Abuse within a relationship is not limited to physical violence. It can also include emotional, psychological, and financial abuse.

That last one, financial abuse, is often one of the least visible forms of control in a relationship. Yet it can have a profound impact on a person’s independence, security, and ability to leave an unhealthy marriage or relationship.

If you’re going through a separation or divorce, here are some important things to know about financial abuse and the legal protections that may be available.

What Is Financial Abuse?

Financial abuse occurs when one spouse uses money, assets, income, or financial information as a means of controlling the other.

In your daily life, it can take many forms, but most commonly includes situations where your spouse:

• Prevents you from working or pursuing your education;
• Restricts your access to bank accounts or credit cards;
• Requires you to provide detailed explanations for every purchase you make;
• Hides income, investments, or assets from you;
• Accumulates debt in your name (often without your knowledge or consent);
• Refuses to provide you with money for basic household needs; or
• Uses your financial dependence as a way to prevent you from leaving the relationship.

In many cases, financial abuse develops gradually over time. You may not immediately recognize that your spouse’s conduct is abusive, because it has become incrementally normalized within your relationship.

Why Financial Abuse Matters During Divorce

Financial control often becomes particularly important if your marriage has broken down.   If you’ve been kept in the dark or incrementally excluded from your family’s finances over time, then you may not truly know:

• What assets exist;
• How much income your spouse actually earns;
• Whether he or she is involved in investments or businesses that you are not aware of;
• The extent of any debts that have been accumulated; or
• Where important financial records are located.

In your separation or divorce, this information imbalance can place you at a significant disadvantage during separation negotiations.

The good news is that Canadian Family Law recognizes this problem, and provides legal mechanisms designed to ensure transparency and fairness.

Financial Disclosure Is NOT Optional

One of the cornerstones of Canadian Family Law is the obligation of financial disclosure. If you and your spouse have separated, you are both generally required to provide complete and accurate information regarding your income, assets, debts, and financial circumstances.  Neither of you can simply refuse to disclose financial information merely because it is inconvenient or embarrassing.

That’s because this information is often necessary to determine issues such as child support, spousal support, and property division.

Courts accordingly take disclosure obligations very seriously. Judges have broad powers to compel production of records and, in appropriate cases, may impose significant consequences on you or your spouse if you fail to provide complete and honest disclosure.

Those consequences can include:

• Costs awards;
• Adverse inferences;
• Disclosure orders, and
• Even the setting aside of agreements or court orders that were obtained without proper financial transparency.

Protecting Yourself

If you believe you may be experiencing financial abuse, it is important to begin gathering and preserving financial information whenever it is safe to do so.

This may include taking copies of:

• Tax returns;
• Bank and investment statements;
• Credit card records;
• Mortgage and loan documents;
• Pay stubs; and
• Business records, where applicable.

It is also important to seek legal advice as early as possible.  Here at our firm, we are familiar with situations involving hidden assets, incomplete disclosure, and financial control – and we’re experienced with helping our clients assert their rights to full financial information.  It’s one of the very first steps toward the longer process of getting them the legal and financial entitlements they deserve.  Give us a call.