As part of the divorce process, both spouses are required to disclose all of their financial assets. However, sometimes one of the spouses may not fully disclose all of their assets. In some cases it is merely an oversight. However, other times a spouse may hide assets because they do not want to share those assets with the spouse they are divorcing. This is especially relevant in high net worth divorces and divorces where one or both of the individuals own a business.
Does your spouse...
Claim assets are lower than you remember?
Claim an income that is low?
Seem hesitant to share financial information with you?
These are signs he or she may be hiding their assets.
How Assets are Hidden
There are many different ways that one spouse may try to hide assets. For spouses that own businesses, they may use the business to make it seem like they have less money than they do. For example, they may wait until after the divorce is finalized to make lucrative deals or may even pay salaries to people who do not exist.
One way that spouses without businesses may attempt to hide assets is through setting up trusts or “gifting” money to someone who will return it after the divorce is finalized. Spouses that hide assets will often involve family members or friends in the process. Sometimes a spouse has already met a new partner and will use marital assets to pay for expenses for that person which will also leave fewer assets for division.
How Hidden Assets Can Be Found
Just because one spouse attempts to hide assets does not mean that the other spouse will not find them. Even if one spouse was solely responsible for managing money, the other spouse can request copies of all the financial documents. If you are suspicious that your spouse is hiding assets, a forensic accountant may be able to help you find the assets. Your divorce attorney can help you find someone qualified to work with you.
Even without a forensic accountant involved, you and your divorce attorney will still have many other ways to attempt to locate hidden assets. One way is through the divorce discovery process. “Discovery” is the evidence gathering process before trial in which the parties are required to answer certain questions and turn over documents or other evidence. Common documents that a spouse may be asked to turn over are tax documents, account statements, loan documents, and any other paperwork that relates to assets.
Finding Hidden Assets
Hire a forensic accountant
Engage in written discovery; request financial documents
Depose your spouse or others who are privy to your spouse’s financial affairs
During discovery, your attorney can ask your spouse to give them specific financial documents, answer questions called “interrogatories,” and even give them access to property. For example, your attorney may want to be able to access your spouse’s art collection with an appraiser to make sure that the collection is valued correctly. Your attorney may also be able to require your spouse to undergo a deposition. A deposition is the answering of questions under oath, typically while being recorded.
Penalties for Hiding Assets
If a spouse is caught hiding assets, the court may require them to pay the spouse’s share of the assets to them. For example, if $10,000 in marital assets were hidden, the judge may order the spouse who hid the assets to pay $5,000 to the other spouse. In a few states a spouse can even be sentenced to jail time for continuing to hide assets.