Hurt feelings and stress can cause people to do questionable things, and divorce is no different. It’s exceedingly common for one spouse to attempt to hide assets from the other during their divorce process. Whether it’s a high-asset divorce and the spouse is disguising the true value of their business or it’s simply one spouse trying to protect their motorcycle from the division of property, all forms of hidden assets are considered a form of fraud and can lead to serious consequences.
Why Do Some Spouses Hide Assets?
The reasons a person may try to hide assets are many, as is the way that they may try to hide assets. Some of the common reasons include:
- They are hiding their personal assets to lower their net worth and hopefully gain a larger share of the marital assets or avoid receiving a higher share of the marital debt.
- They are purposefully devaluing their business in order to prevent the other spouse from gaining a large enough stake in it to threaten their control.
- They are hiding specific assets, such as vehicles, antiques, or artwork, which cannot be easily replaced if it is awarded to their soon-to-be ex-spouse during the divorce.
- They are attempting to lower their apparent net worth to reduce the amount of alimony or child support they will be ordered to pay.
- They are attempting to hide any financial records of infidelity.
What Can I Do If I Suspect My Spouse of Hiding Assets?
Being the “out-spouse,” or the spouse that doesn’t have immediate knowledge of your marriages finances, can be stressful. If you notice inconsistencies in your spouse’s personal financial statements or suspect that they are trying to hide assets from you, it can be difficult to know which course of action to take. What isn’t an option, however, is allowing them to continue.
Your spouse’s financial dishonesty can be costly for you during your divorce, which is why it is critical to take action. If you don’t know where to begin your investigation, start by speaking with a divorce attorney who is familiar with divorces involving hidden assets. They can help you understand where to look and how to find the evidence you need.
The Discovery Process
If you believe that your spouse isn’t being honest, it’s time to take legal action. The discovery process is the way in which both parties gather information and documents to investigate the evidence. This process typically involves:
- Document demands: Your attorney will request specific documents, including tax returns, financial statements, loan applications, account records, and more.
- Interrogatories: Also called “requests for admission,” this discovery tool requires your spouse to answer questions in writing or admit specific statements that you believe to be true.
- Inspection demands: You can demand access to property, including safe deposit boxes, wine cellars, and business offices for inspection purposes.
- Testimony under oath: This is also known as an oral deposition, in which you, your spouse, and your lawyers appear before a court reporter to answer questions under oath.
If you need further information about your spouse’s financial affairs, the discovery process is an excellent start. Because it is a legal action, the court has the power to compel compliance and order your spouse to provide the information.
Finding Hidden Assets
The discovery process can give you information, but it is likely that you will need to dig a little deeper to uncover any deception. Your attorney can help you look for inconsistencies and further investigate the issues discovered, but that isn’t the only way. Forensic accountants are financial experts who use a variety of tools to identify and investigate inconsistencies in financial records, including:
- Tax returns
- Hidden bank accounts
- Cash flow and account records
- Loan applications
- Financial statements
- Business accounting records
- And more
Depending on the types of assets hidden, it can be a challenge to uncover the full extent of your spouse’s dishonesty. If they’ve given away artwork, vehicles, properties, or other assets as gifts with the intent to get them back, it can be hard to uncover the damage.
The good news is, the court will help you compel your spouse to reveal what has been hidden. In many cases, you only need to find enough evidence to cause the judge to reasonably doubt your spouse’s honesty. If the court believes that your spouse has attempted to hide assets, they may penalize them by awarding a far smaller share of the marital assets to the dishonest spouse, ordering more spousal support, or compelling them to provide extensive financial records.
Looking for hidden assets can be a complex task, but you don’t need to face it alone. Our experienced Katy divorce attorneys had the insight and knowledge to tackle hidden assets and other potential divorce issues. Schedule a consultation today to learn how our team at the Adams Law Firm can assist you.
Contact our offices by calling (281) 764-6087.