When couples are separating their assets during the divorce process, it is common for one party to feel they’re drawing the short straw.
When it seems as though your ex is about to make out much better than you in the property settlement, you might be tempted to hide your assets from the court and your spouse to keep them from being divided during divorce. Or perhaps you’re considering hiding money to avoid child support.
Not only is this a bad idea, but it’s also illegal.
Divorce lawyers are trained to uncover any efforts to stow away marital property during discovery, so there’s a good chance they’re going to find your hidden assets and you’re going to get caught. On top of that, advancements in technology have made it even easier for attorneys and increased the likelihood that you’re going to get busted.
The potential to hold on to a large chunk of money or property for yourself is tempting, especially when there is animosity between you and your ex, but the inherent risks of trying to get one over your judge and ex should be more than enough to convince you otherwise.
Hiding marital assets
The reasons why one party would try to hide wealth or property from the court varies. A common reason is that marital assets are legally required to be split, and a party may disagree with how the marital pot is being divided.
A number of factors – such as whether you live in a community property or equitable distribution state, how long you’ve been married, and each spouse’s potential earnings – could result in you getting less in the divorce settlement.
This creates motivation for someone to conceal the actual amount of marital property they possess if they think they deserve a bigger share than the court will likely hand out.
Furthermore, it could be seen as an advantage for a party to underestimate their income in order to receive a lower child support or alimony amount.
Finally, some may simply want to prevent their spouse from utilizing an asset out of spite. Divorce tends to get very contentious, which causes both parties to react emotionally and irrationally to try to get back at each other. It’s not difficult to picture someone trying to keep an asset that their spouse values as a way of getting revenge.
Methods for concealing assets
The traditional tricks people use when it comes to concealing wealth aren’t that complicated. They include giving money or property to a friend or family member to hold during divorce, selling assets before divorce at a price much lower than their value, utilizing a secret bank deposit box to hide money or other valuables or even destroying property.
By transferring assets before divorce or destroying them, the hope is that they’ll be overlooked as the court determines the amount of the marital pot.
The methods people will use to hide assets can get more complicated when they have more to lose. The very wealthy and technologically-savvy have a reputation for hiding assets offshore in offshore bank accounts and utilizing anonymous digital currency like Bitcoin to try to keep their true wealth a secret.
If your ex wasn’t hands-on with the household finances and doesn’t have a lawyer, these attempts have a better shot at succeeding. However, more than likely your spouse will retain legal counsel skilled in uncovering your efforts if you’re wealthy enough to go through the hassle of hiding them.
Penalty for hiding assets during divorce
During divorce, both spouses are usually required early on in the case to fill out a financial declaration that discloses all sources of income and assets. By signing this disclosure in divorce proceedings, each party is swearing under oath that what they complete is accurate. Failure to disclose financial information in divorce has serious consequences.
If it comes out during discovery that you knowingly withheld financial information or assets with the intent of keeping the other party from getting their share, the judge has quite a few options to impose penalty for hiding assets in divorce.
Penalties range from receiving a smaller share of the marital pot to paying attorney fees of the other party. You could even face criminal charges for contempt of court and perjury that could result in jail time.
For example, most states consider money earned during the marriage marital property and so it is up for division during divorce. If you have a secret account that you fail to disclose in your financial declaration but is later uncovered during discovery, the other party will be eligible for a portion of that account.
Since you tried hiding money in a divorce, the judge might also decide to hit you with additional penalties. Your wife might be awarded a larger distribution – or even the entire amount – instead of just the marital share that would have been given had you been honest from the start.
Some states even discourage this type of divorce fraud by allowing divorce cases to be reopened after it has been finalized if it is later learned that you or your spouse did not fully and honestly disclose assets the first time around.
The potential economic consequences should be enough to deter you from hiding anything, but perhaps what is even more damning is the fact that you’ll lose credibility in the eyes of the judge for the rest of your case. The fact that you knowingly lied is likely to carry over into other parts of your case. You lied under oath, so why would the judge believe you when you claim you can’t afford child support?
The temptation to hide money or property is understandable, especially if you think your spouse failed to contribute much to the marital estate, but it’s hardly the best way to protect assets from divorce. The risks of getting caught lying in divorce proceedings should far outweigh any potential benefit.
You might think you have a foolproof plan to get away with it, but attorneys know the game and catch on to most tricks. Falling into the trap of thinking you’re more clever than you really are could cost you big time in the long run.
If you need help figuring out how to protect your assets in a divorce or need assistance tracing hidden assets that you feel your wife is hiding, consult with a family law attorney. The time and effort you spend thinking up ways to hide money in a divorce would be better spent working with a lawyer who can help you in protecting assets before divorce and come up with a strategy to help keep your finances secure through the process.