A divorce can be a daunting experience, filling either of the involved spouses with fear of losing valuable assets to their soon-to-be ex. If there was no signing of a prenup and one spouse has significantly more properties than the other, chances are the spouse with more assets will be upset with the final divorce settlement. This likelihood, combined with anger towards their partner and a sense of entitlement for properties they acquired, can tempt them to conceal assets.
Hiding assets during a divorce is a terrible move that could land you in legal trouble. The ideal thing to do if faced with this situation is to retain an experienced lawyer to help you establish what assets are yours and whether your spouse has any hidden away.
At Los Angeles Divorce Lawyer, we will assist you in discovering concealed assets. Our lawyers have experience dealing with cases of concealed assets during divorce proceedings and understand how we can apply the law to our clients’ advantage. Call us for a consultation before you can proceed with your divorce.
Assets and Divorce
Asset division is among the contentious subjects of many divorce cases. It is among the reasons experts recommend seeking mediation before retaining individual attorneys. In many cases, mediation simplifies the asset division process both methodically and calmly. By managing tempers, those tempted to conceal assets because of resentment and anger choose not to. Irrespective, the particulars of your finances and other properties are all incorporated into your divorce proceeding.
Property Division Laws In California
California is a community property state. That said, it is among the few states that split marital assets in the event of a divorce. Each spouse acquires half of the marital property, except if a postnuptial or prenuptial agreement dictates otherwise. Consequently, some spouses may be tempted to hide assets during their divorce to bar their partner from acquiring an interest.
According to California law, spouses must file a full financial disclosure report when undergoing a divorce. This includes documenting their joint and individual financial accounts, collectibles or toys of worth, or properties. Nevertheless, that often does not mean your partner will be truthful when completing that report.
Why a Spouse May Hide Assets
A spouse sometimes finds means to conceal their properties to exempt them from divorce. Unless it is property acquired before the marital union, assets previously isolated under the prenuptial agreement, or an inheritance, it is illegal to hide assets. Thus, it is understandable why a person would be tempted to conceal property.
If, for example, you did not take the right precautions to safeguard your business before entering a marital union, your partner may be entitled to 50 percent of it, which could feel unjust, but that is what the law states. You may have done various side hustles for several years, saving money while your partner never worked, and you might think that all of the money is rightfully yours.
Or you could keep up-to-date with all your debt while your partner was constantly shopping and now owes a significant amount of money on credit cards, which you did not know about. Should you not have the right to more credits while your partner takes over their individually obtained debts? Sadly, that is not the way it works in community property states.
Common Ways Of Concealing Assets
Reasons for concealing assets are many, but do not do it. Chances are you will be caught, which can bring you big problems. Judges are usually not lenient on people who conceal property. In most cases, a judge will bypass the usual 50/50 division and award a significant percentage of or all hidden property to the innocent spouse.
There are several ways in which a spouse can conceal or hide property from their partner. Usually, concealing assets is not a question of establishing offshore accounts or purchasing family suitcases of money. It entails easier but sneaky methods, and understanding the most common of these ways can assist you in identifying and locating the hidden property during your divorce process. Ways through which your spouse may attempt to conceal assets in a divorce include the following:
Concealing Financial Accounts
It is common for one spouse to handle most or all the financial matters in marital unions. Then, as everything begins to crumble or divorce proceedings approach, they might close accounts or omit to disclose them on the legal disclosure paperwork necessary for the divorce proceedings. There are also situations where a spouse creates an account in their child’s name and with their social security number, then withdraws the entire money back to themselves once the divorce is finalized.
Concealing Assets In Businesses or Overseas
A business owner can easily conceal property; they could create fictitious expenses or workers they are paying, shelter financial assets, or postpone lucrative deals to conceal the funds their partner has a 50% right over. At times, people conspire with fellow employees or colleagues to delay bonuses. Alternatively, they pay off willing accomplices (family members, employees, or friends) for services not rendered, using the payment as a holding or an expense acquired back after the divorce.
Gifting Relatives or Friends Money
Perhaps one partner had an investment or savings account that the other did not know about. They could liquidate the accounts, gift the cash to relatives and friends for the period of the divorce process, and then acquire them back once the divorce process is over.
Overstating Personal Expenses and Debts
Some partners might withdraw money via credit card advances or overstate their debts. In this case, the debts are split, but the liquid cash value will remain in the possession of one party. At times, parties also claim debts they never had, such as fake loans to a family member or friend.
Understating, Undervaluing, or Hiding Marital Property
Most couples stay under one roof, share everything, and are aware of each other's individual acquisitions. Still, other couples live independent and separate lives within their marital union, meaning they may acquire valuable things their spouse does not know about.
Alternatively, one party might be a collector and be aware that certain collectibles and possessions are worth much more than their spouse knows. In this case, they might undervalue the items and request them during the divorce process--making it seem equitable. The other spouse consents, and the scheming spouse ends up with more.
Other ways through which your spouse can conceal assets are:
- Altering the delivery mode and address for account statements and billing statements.
- Deferring bonuses, commissions, or salary.
- Selling properties to somebody for a lower amount than their actual worth only to purchase the properties back once the divorce is finalized.
- Transferring property into private accounts that you do not know exist.
- Overpayment of tax bills to acquire a significant refund the next year.
- Making phone loans to friends or family who will hold the payments for the spouse until after the divorce.
- Creating fictitious debts.
- Taking cash withdrawals on credit and debit cards.
- Creating fictitious costs for their business to lower the business’ value and keep the funds paid for the expenses.
The list is long, but the bottom line is that if you are subject to divorce proceedings and you think or suspect your spouse is concealing property, take action as soon as possible. Or, you can prevent the hiding of assets from happening in the first place. Among the ideal ways of preventing your partner from hiding property is by being involved in the family finances. Your partner will have a hard time concealing property if you are conversant with your accounts and community property.
How To Find Concealed Property In a Divorce Case
Notify your divorce attorney immediately if you trust that your wife or husband is concealing assets during the divorce process. There are actions your lawyer can take to find the hidden property. Ways of finding hidden property include the following:
Hiring Various Experts to Locate The Hidden Assets
Your lawyer may hire an expert, such as an investigator, to locate the hidden property. Some investigators specialize in finding assets that individuals attempt to hide. They utilize all forms of forensic accounting and software methods to locate records or accounts that might be difficult to find otherwise.
A forensic accountant is another professional your lawyer may hire. These specialize in reviewing and analyzing financial accounts and information. A forensic accountant can help analyze intricate financial transactions and documents to find concealed assets.
If they are tangible properties and you do not know anything about them, your lawyer can hire an appraiser to help you learn the actual value of all the property you both own, achieving a more equitable division.
Using the Discovery Process
In a divorce proceeding, a spouse can utilize discovery techniques to acquire information and evidence from their partner. Thus, your lawyer can submit requests and questions for admission to your spouse. These interrogatories must be answered under the penalty of perjury. Your lawyer might also take a disposition of your spouse. At the disposition, your partner must respond to questions while under oath, and a court stenographer will record the testimony word by word.
Production requests necessitate that your partner present documents, including loan applications, tax returns, financial statements, and account records. If you have reason to trust your soon-to-be ex-wife or husband is hiding property in a deposit box, safe, or somewhere else, your lawyer may file a petition in court requesting to scrutinize the safe or deposit box’s contents for hidden properties.
The discovery procedure is ideal for obtaining additional documentation and information about the property. However, your partner may lie, hoping they can keep concealing the property without being found out.
Financial Account Monitoring
You can assist your lawyer in finding hidden property by tracking financial accounts. For example, you could monitor cash flow and your account activity to note deviations and patterns from the patterns that may prove your partner is concealing assets. Be very attentive to a gradual reduction in money in your financial accounts. Your wife or husband may take little amounts with time to hide cash.
Additionally, review canceled charges and checks to your financial accounts for any unusual expenditures or changes in spending habits. If you are unaware of why a given amount was paid or withdrawn, note it down for your lawyer to request details from your partner through the discovery process.
What Happens When a Spouse Conceals Assets in a Divorce?
Deliberately hiding property during a divorce can subject the culprit to criminal or civil consequences in California. If you locate hidden property during your divorce, the judge may direct your partner to reimburse all the expenses you used to find those properties, including accountant, investigator, and attorney fees. The judge may also grant a more significant percentage of the marital property due to your partner's actions.
If your partner lies on their financial disclosure form, the prosecution can charge them with perjury. These charges can lead to fines and jail time. Based on the seriousness of the circumstances, the spouse may be subject to other criminal charges, fraud included.
Not All Property Can Be Split During a Divorce
A spouse can sometimes attempt to evade the division of community property by alleging that assets are separate property. Separate assets are exempt from community property statutes. Examples of these assets include the following:
- Assets a spouse owned before being married.
- Gift from spouse to spouse.
- Gifts a spouse receives during or before the marriage.
- An inheritance a spouse receives during or before the marital union.
- Property that a spouse acquires after the spouses have permanently separated.
- Income or interest a spouse earns on separate assets.
- Earnings or assets the partners agreed in a marital agreement that would remain separate.
The classification of property in divorce cases can be complex. Separate assets can sometimes turn into community property through transmutation. Similarly, a spouse may use different measures to turn community property into separate property. For example, they can give marital finances to their friend to buy a costly gift for them.
An experienced property division attorney understands how intricate the classification of separate assets is and how they can demonstrate that the assets your spouse alleges to be separate are marital.
What To Do If You Believe Your Spouse Is Concealing Property
Before starting the divorce process, you want to have all your paperwork ready, including a list containing all your liabilities and assets. This will not only assist you in filing your financial disclosure report but also help you establish where to search for properties that might be missing and establish the worth of what property you know about.
Among the paperwork and documents you will require are:
- A listing of all the known liabilities and assets.
- Existing pay stubs.
- A listing of all cash flow and income sources.
- A listing of your and your spouse's employment history.
- Credit card statements.
- Any inheritances and gifts you or your partner received when married.
- All the previous tax returns.
- Details on all assets you co-own with your spouse.
- Canceled checks.
- Bank statements.
- Any brokerage statements of accounts.
- Loan applications, including the individual financial statements your partner might have presented to obtain the loan to begin with.
Apart from collecting your financial paperwork, you should research any suspicious activities of your spouse. Some of the aspects to be attentive to include the following:
- Notice deviations in conduct—find out whether there have been any unusual deviations in your partner's behavior, for example, if your partner is becoming more secretive or controlling concerning bank accounts and other spending accounts.
- Monitor account activities—trace all the activities involving your cash flow and accounts during your marital union, noting the patterns and changes in those patterns.
- Note slow drains—be keen on even a slow diminishment of money in your accounts. It is not uncommon for partners to gradually drain accounts of money over an extended period.
- Review canceled checks—carefully assess your canceled checks for deviations in spending habits or purchases you are not conversant with. If you usually do not receive copies of your canceled checks, request them from your bank. If you do not use checks, review all your bank statements, taking note of any recurring patterns of minor withdrawals.
- Bill destination—determine where all the bills go. For example, did your and your partner’s credit card statements used to be brought to your home and are not anymore? If that is the case, you may need to determine where they go. That also applies to other statements and bills, including bank statements, investment account statements, retirement account statements, car payments, et cetera.
- Changes in spending—changes in general spending patterns, particularly if there is any significant decrease or increase, including any variations to how little or how much is paid on bills.
Find a Divorce Lawyer Near Me
Your wife or husband must disclose all the property so that, during divorce, you can acquire a fair percentage of the marital assets per the state's community property statutes. If you believe your spouse is concealing property, call a skilled divorce lawyer immediately.
At Los Angeles Divorce Lawyer, we diligently search for the property your spouse may try to hide. We are readily available to establish whether anything fishy is happening and ensure your marital property is split as equitably as possible. Call us at 310-695-5212 for a comprehensive consultation to discuss your situation.
