How Financial Abuse Impacts Divorce Settlements

💡 This is Part 2 of our series on financial abuse in relationships. If you missed Part 1, click here to read about what financial abuse looks like in marriage and divorce.

A woman examines her open, empty wallet, reflecting on financial challenges.

While every state is a little different, family courts generally recognize that financial abuse can directly affect fairness in a divorce. Here are some of the most common ways it shows up in the legal process:

Temporary Court Orders

If one spouse cuts off the other financially, judges can step in quickly. Courts often issue temporary orders requiring the higher-earning spouse to continue paying the mortgage, utilities, or temporary support while the divorce is pending. This helps prevent one spouse from being left without resources.

Financial Disclosures

Both parties are required to provide full financial disclosures—things like tax returns, pay stubs, bank and retirement accounts, and debts. If a spouse hides assets or withholds documents, the court can impose penalties or award the other spouse a larger share to balance things out.

Division of Assets

If one spouse dissipates marital assets (for example, draining accounts, overspending, or moving money to avoid sharing it) the court may compensate the other spouse through a greater share of what remains.

Spousal and Child Support

Financial abuse often highlights the income gap between partners. If one spouse prevented the other from working or restricted access to funds, judges may order higher spousal maintenance (alimony) or child support to ensure fairness.

Custody and Credibility

While financial abuse doesn’t automatically determine custody, it can raise red flags about judgment and responsibility. Judges may question whether someone who manipulates finances is putting the children’s best interests first.

Property Division: Community Property vs. Equitable Distribution

One major factor in divorce outcomes is whether you live in a community property state or an equitable distribution state:

• Community property states (only nine in total: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) generally divide marital property 50/50.
  

• Opt-in states (Alaska, Tennessee, Kentucky, and Florida) allow couples to elect community property treatment by agreement or trust.
  

• Equitable distribution states (the vast majority, including Colorado and Illinois) divide assets in a way that is “fair,” which does not always mean equal.
  

This distinction matters when financial abuse is in play. In a community property state, hidden spending or asset dissipation may still result in a 50/50 split unless the judge adjusts for fairness. In equitable states, judges have broader discretion to compensate the abused spouse.

No-Fault vs. Fault-Based Divorce

Another key difference across states is how fault is treated:

• No-fault divorce allows either party to end the marriage without proving wrongdoing. Misconduct such as adultery isn’t considered when dividing property. However, courts do recognize economic fault - actions like hiding money, gambling away marital funds, or overspending on a paramour. In these cases, the spouse who dissipated assets may receive a reduced share.
  

• Fault-based divorce (still available in some states, including Texas) allows one spouse to cite grounds such as cruelty, abandonment, or adultery. In these cases, misconduct can play a role in asset division, alimony, and sometimes even custody decisions.

How This Plays Out in Key States

• Colorado: A no-fault, equitable distribution state. Courts won’t consider marital fault (affairs, neglect), but they do consider economic fault if you can prove one spouse harmed the marital estate financially. That said, proving dissipation is difficult - documentation is essential.
  

• Texas: A community property state that still allows fault-based divorce. Financial abuse combined with fault (for example, cruelty or abandonment) can influence how property is divided. While the starting point is 50/50, judges can shift the balance if one spouse clearly harmed the other financially.
  

• Illinois: A no-fault, equitable distribution state, but with strong requirements around financial disclosures. Attempts to hide assets or withhold records are taken seriously and can result in one spouse being awarded more of the marital estate.

✅ Bottom line: Financial abuse doesn’t disappear when divorce begins - it’s often a central issue that can increase after filing. Courts take it seriously, but outcomes vary depending on your state’s laws. Whether you’re in a community property or equitable distribution state, or whether fault is considered, the key is clear documentation and strong advocacy.

💬 If you’re facing financial abuse and worried about what it could mean for your divorce settlement, you don’t have to navigate it alone. At Clarity Financial Wellness, I help clients uncover hidden assets, make sense of financial records, and prepare the strongest possible case for their legal team. Additionally, I can flag tax implications, support scenarios, and property division issues. Reach out here if you’d like to talk.