Hidden Assets in a Divorce Case
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What are Hidden Assets in a Divorce Case?
In any divorce case, the individual spouses have a legal duty to disclose all information regarding their assets, financial accounts, and properties. Thus, hidden assets in a divorce case refer to those assets which a spouse purposefully conceals or transfers so that the other party is prevented from claiming them.
One of the more common ways to hide assets is to transfer them to an account that the other spouse is not aware of. Hiding assets may also involve other types of conduct, such as undervaluing a particular piece of property. The distribution of property in a divorce claim will depend on whether the couple files in a community property state or not. However, hiding assets is illegal regardless of what type of marital property rules are enforced in the state.
What are Some Examples of Hidden Assets in a Divorce Case?
Some common examples of hidden assets in a divorce case may involve:
- Antiques & Collectibles- these are often the subject of property disputes in a divorce because of the difficulty in determining the value of unique items. Knowingly representing an antique as cheaper than it really is can sometimes be considered fraud
- Income Statements: Falsifying an income statement is illegal, as is failing to present a requested income statement during trial
- Cash: Be aware of cash that is kept in forms that are difficult to trace to a spouse’s account, such as a traveler’s check.
- Accounts: Funds are often diverted into an account set up for a different person, such as a child or relative, especially where the spouse has access to the person’s ID or social security information
- Phony debt: This refers to funds that are transferred to a friend or colleague to pay back debt which doesn’t exist. The friend can then return the funds after divorce proceedings
- Benefits: Some benefits like retirement accounts are transferable to a spouse. With these types of assets, the retired spouse may fail to inform the other spouse about their eligibility, or about the existence of a retirement plan
Thus, hidden assets can involve both illegal means (i.e. fraud), as well as legitimate loopholes. However, abusing legitimate routes for the purpose of defrauding the court or the other spouse is illegal.
How are Business Assets Factored into a Divorce Case?
In many marriages, it’s common for one spouse to own or operate a business on their own, without the involvement of their spouse. This type of arrangement can also create different avenues through which assets can be illegally hidden during divorce. For example, hiding business assets may occur through:
- Delaying in signing business contracts, especially where the delay will serve to lower the value of the business
- Making salary payments to non-existent employees, and then voiding the checks after the court hearings
- “Skimming”- i.e., taking cash from the business for personal use
- Making business payments for services never rendered
As mentioned, taking steps to lower the value of an asset can also lead to legal consequences. If there is any doubt as to the true value of any given asset, it may be necessary to hire an appraiser or a lawyer for more guidance.
What are the Consequences of Hidden Assets in a Divorce Case?
Hidden assets in a divorce case can definitely mar the outcome of the property distribution. Besides this, a party that is found guilty of hiding assets can face criminal charges. Depending on the type of violation(s) involved, these can include: fraud, contempt of court, non-disclosure violations, and perjury.
In the long run, these consequences can be costly and may result in criminal charges on one’s record. It’s definitely not worth the risk to attempt to hide assets simply to save money or to frustrate the other party.
Do I Need to Hire a Lawyer if I Have Issues With Hidden Assets in a Divorce Case?
Divorce claims are actually private lawsuits between the individual spouses. In any divorce proceeding, it’s to your advantage to work closely with a divorce lawyer. An experienced attorney can help you resolve any issues with hidden assets, and can represent you during the formal court hearings.
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Last Modified: 03-27-2012 02:58 PM PDT
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