When going through asset distribution during a divorce, one of the assumptions is that both spouses are presenting a clear and accurate financial picture of all their assets and debts, whether or not they are held jointly. When one spouse chooses to willingly hide assets during the divorce process, not only will it complicate and draw out the process, but can have serious legal implications. If you suspect that your spouse is attempting to conceal assets, there are legal strategies you and your attorney can do to ensure that your asset division is fair and equitable.
Asset concealment can also be referred to as financial deception in the divorce process. Essentially, one spouse will try to hide assets so they cannot be considered in asset division. The motivation to do this can stem from several issues. Some spouses may feel as though their spouse should not be entitled to certain assets, either because they were acquired “alone” during the marriage, such as when one spouse has a successful career and feels that they alone should reap the benefits. Some spouses want to maintain financial control over the other, so they conceal assets and don’t allow the other spouse access. Some are concerned about what a higher net worth might mean for child or spousal support and will hide assets and exaggerate debt to attempt to reduce these payments. Often, a spouse who is planning to conceal assets during the divorce will start the process of limiting access and moving assets before the divorce proceedings begin.
Asset concealment is harmful to both spouses during the divorce process. For equitable asset distribution, both spouses need to present a full financial picture to their attorneys during the divorce process. When one spouse is hiding assets, the distribution will not be equal, with one spouse receiving less than they were entitled to, which can set them up for a struggle after the divorce. In addition to the challenges faced by the spouse who is not getting their fair share, there can be significant legal consequences if and when the hidden assets are uncovered. Some judges have been known to not only order a full financial document review to ensure compliance, but have handed down punitive settlements, fines, and even charges of contempt of court.
If you suspect that your spouse has been attempting to conceal assets during your divorce, there are some tactics that are common and can be quickly discovered. In some cases, one spouse will begin to transfer certain assets to a third party before filing for divorce. This can include moving money out of individual or joint accounts and into a third party’s account, gifting or “selling” assets to a third party at a significantly lower value, or moving certain accounts offshore. If one spouse owns a business or operates primarily in a cash business, they will often begin to underreport income, sales, and business earnings in an attempt to lower their overall net worth.
There are some red flags that can indicate your spouse is attempting to conceal assets. Look for sudden changes in financial habits. If there are unexplained withdrawals, excessive spending sprees, or a sudden change in income or expenses, this can be a sign that your spouse is attempting to rearrange assets or lower overall net worth.
During the discovery process in the divorce, look for incomplete or inconsistent financial documents. If you suspect that your spouse is attempting to conceal assets, you need to make sure to address it early in the divorce process. This can include:
When you are divorcing and splitting assets, you need to make sure that you are protecting your own financial future. The best way to do this is to have an attorney who understands both what your spouse may be attempting to conceal and the best strategies for uncovering financial deception. Your attorney should be experienced and skilled enough to recognize the signs of asset concealment and have a plan in place to respond in a way that ensures a fair and equitable distribution of all assets, not simply the assets your spouse wants you to have access to. Choose an attorney you trust to share all your suspicions with, and who has worked with clients in similar situations before. Be vigilant about your finances while preparing to file for divorce, and make sure you are being honest and transparent yourself. If you suspect your spouse is preparing to file for divorce, or you are filing for divorce and anticipate issues with asset division, contact my office today.