Hiding Assets During Divorce
Money problems are one of the leading reasons that couples split, so it’s no surprise that divorcing spouses may attempt to conceal assets. In some cases, partners keep financial secrets during the marriage, and that deception may continue as the couple goes through the divorce.
Concealing assets most commonly occurs in cases of significant wealth, but middle-class spouses also may attempt to keep funds shielded from the property division process.
Hiding assets is, at best, unethical. It also can be illegal. If you’re going through a divorce, here is what you need to know to ensure that you receive a fair settlement.
Why — and How — Do Spouses Try to Hide Assets?
Marital assets can include cash, bank and investment accounts, rental properties, the marital home, vehicles, life insurance, art, jewelry, stock options and more. Keeping track of the many components of an asset portfolio can become complex, and it’s easy to forget what you’ve accumulated during your marriage.
In some divorce cases, spouses may attempt to capitalize on their partner’s lack of knowledge about the portfolio by hiding income and assets. The concealment occurs because one spouse does not want to share the entirety of the assets (for various reasons).
Spouses employ a number of techniques to hide assets during divorce. For example, a wife who is self-employed may not report all income to her partner, or she may delay a bonus or a big payment from a client. A husband may overpay taxes to the IRS in anticipation of a later refund, or he may under-report income intentionally.
Some people choose to hide large amounts of cash, either around the house or in discreet safe deposit boxes in financial institutions. Others may create fraudulent debts to pretend that their net worth is lower than it actually is. In some cases, spouses purchase items such as artwork or jewelry and lowball the value in an attempt to hide true net worth.
Uncovering Hidden Assets
What should you do if you are beginning the divorce process and your spouse fails to turn over needed financial documentation? Reluctance to share information may indicate that your spouse hopes to hide assets, denying you a fair share of your marital property.
By working with an experienced divorce and family law attorney, you can reduce the chances that your spouse can successfully conceal assets to which you have a valid claim.
Your attorney will work with you to follow the money by reviewing tax returns, bank statements and other documents for clues that your spouse is attempting to hide assets. If your spouse tries to turn over only certain pages of a tax return, they may be hiding the supporting forms and schedules that include vital information about additional income or assets.
Some spouses go as far as providing false tax returns in divorce cases to give an inaccurate financial picture. Your attorney can assist you with requesting a full tax transcript from the IRS, which will include the existence of any amended returns.
Significant Impact and Penalties
An individual who attempts to mislead can incur a significant penalty for hiding assets in divorce. If a perpetrator is caught, a judge can impose financial penalties. In addition, the court could force the spouse hiding assets to forfeit their share of a different asset as restitution to the wronged spouse.
If alimony is awarded to the wronged spouse, a judge also can increase the payment amount to cover the hidden assets. In some cases, hiding assets can constitute a criminal offense.
The former partner can also be negatively affected when the spouse manages to get away with hiding assets. If one spouse drains a bank account, the wronged spouse may never recover that money — which can affect child support, education, housing options, medical bills, and other expenses for years to come. If a court deems your spouse’s income to be lower than it really is, you may receive less child support or alimony than you deserve.
If you discover after a divorce that your spouse concealed assets, your attorney can help you file a motion with the court to reopen the case. The court may amend your divorce agreement to provide you with an equitable share of the assets if the evidence indicates that your spouse hid information. In addition, your case may warrant filing a civil action for monetary damages against your former spouse.
Do you believe your spouse has concealed assets during your divorce? If so, you can protect your rights by working with an experienced divorce attorney. To schedule a consultation, please contact Infinity Law Group.