Even if a divorce is especially contentious, it’s important for spouses to remain honest and forthright throughout the process. This is especially pertinent when it comes to assessing the value of their marriage’s community property, so that it may be evenly distributed between them.
The property division process begins when both spouses openly – and honestly – disclose their income, assets, and debts. This includes all community and separate property, although the latter may not be considered for property division. It must still be included, however, to get a full picture of each spouse’s financial situation.
Unfortunately, this is also a time when both spouses need to be wary of each other’s potential for dishonesty – specifically with regard to hiding assets. Because all community and separate property need to be disclosed, it is not lawful for someone to willfully attempt to hide their property. This is particularly egregious when the property being hidden is community property, and thus subject to equal division.
How Do People Hide Assets during Divorce?
There are numerous ways in which people may try to conceal what they really own in an attempt to walk away from the divorce with more than they deserve.
People may attempt to flush bank accounts and sell valuables and store the cash somewhere secret. They may hide the valuables themselves and sell them later once the divorce is finalized. They could also have assets tied up in secret business interests, bank accounts, and securities – particularly anonymously held cryptocurrencies.
Most of the time, though, the method people use is one of the oldest tricks in the book: giving money or property to a friend or family member to hold while the divorce is ongoing. These may be explained away as legitimate loans or “gifts,” but if the other spouse knew nothing about them or didn’t approve of them, then it could be interpreted as an attempt to shield certain community properties from the divorce.
What Should Someone Do If They Suspect Their Spouse Is Hiding Assets?
If you suspect your spouse is hiding assets, check the statements for all of your jointly held bank accounts and credit cards for unusual transactions. Unexplained withdrawals – whether a large sum or many smaller withdrawals over a period of time – from a checking account should be enough to raise an eyebrow. The same can be said for similar types of credit card transactions, including massive overpaying of a credit card bill.
By examining these statements, you may uncover activity that you should bring to your attorney’s attention. If your spouse is funneling community property somewhere else and isn’t being forthright about where it went, then your attorney can help you investigate what’s going on and bring the activity to the court’s attention.
You may also want to survey the valuables in your home and make sure everything is where it should be. If it’s not, and your spouse is claiming they don’t know what happened to it, then you should also bring this up with your attorney. Your spouse could be telling the truth, but they could also be selling valuables they think you’d miss and pocketing the money for themselves.
Finally, you may want to keep your eyes peeled for documents that suggest community property is being inappropriately diverted or concealed.
Are There Penalties for Hiding Marital Assets?
Hiding marital assets is illegal, and there are civil and criminal penalties for doing so. If the court finds that a spouse was hiding assets during divorce proceedings, it can award more of the marital property to the other spouse. If the hidden assets cannot be recovered because they were spent or sold, then their full value may be stricken from the offending spouse’s share of the remaining marital property. Also, the court may order the offending spouse to pay the cost of any investigations that took place to discover the hidden assets.
In California, hiding marital assets during divorce can also result in a perjury charge. Perjury is willingly and knowingly making a false statement or telling an untruth, which is what can occur when someone fails to disclose all of their financial assets during divorce. Perjury is punishable by up to four years in jail.
Do You Need Legal Assistance?
Claery & Hammond, LLP can provide the legal guidance and assistance people need to make it through difficult divorces. Property division is often the most contentious part of a divorce because it involves two individuals trying to disentangle their financial lives and come out OK in the end. Rest assured that our goal as a firm is to provide the representation our clients need to achieve the best possible outcomes during a difficult period in their lives.
If you are involved in a property division dispute, have concerns that your spouse is hiding marital assets, or have been accused of hiding such assets, Claery & Hammond, LLP can provide legal support.