Going through a divorce is tough enough, but when you start getting into the nitty-gritty of financial disclosure, things can get complicated and heated. That’s why it’s essential to clearly understand the financial disclosure process and your rights regarding asset division. In this blog post, we’ll answer some of the most frequently asked questions about divorce and financial disclosure so you can confidently approach the process.
What is Asset/Income Hiding, and Why is it Illegal?
Hiding assets or income during a divorce is illegal in most states because it gives one spouse an unfair advantage during property division negotiations. When one spouse hides assets, it can be difficult for the other spouse to receive their fair share of the couple’s property. Additionally, hiding assets can also impact child support and alimony payments.
How Can You Tell if Your Spouse is Hiding Assets/Income?
There are a few signs that you can look for that may indicate that your spouse is hiding assets or income from you. For instance, if your spouse suddenly starts keeping tighter control of the family finances or stops sharing information about their income with you, that could be a red flag. Additionally, if your spouse starts making large purchases without explanation or transferring money to hidden accounts, those could also be signs that they are trying to hide something from you.
What Are Some Common Methods of Hiding Assets/Income?
Concealing Money in Hidden Bank Accounts
One of the most common methods of hiding assets or income is concealing money in hidden bank accounts. This could involve setting up a new account under a false name, transferring money into an existing account without notifying the other spouse, or having funds directly deposited into secret accounts without any record.
Transferring Property to Friends or Family Members
Another way people try to hide assets is by transferring property such as real estate, stocks, bonds, and vehicles to friends or family members. This asset transfer often occurs when both spouses are unaware that it has happened. It’s important for individuals going through divorce proceedings to be aware of this tactic so they can protect their financial interests accordingly.
Underreporting Income on Tax Returns
Underreporting income on tax returns is another popular method for hiding assets during a divorce. This involves intentionally reporting less income than was earned to reduce the amount that must be paid in the settlement agreement. As with any tax fraud, this is illegal and carries serious consequences if discovered.
Hiding Valuable Possessions
Yet another way people try to hide assets during a divorce is by simply stashing away valuable possessions such as jewelry and artwork in secure locations known only to them. While it might seem easy to get away with concealing assets from the other spouse, it can lead to costly legal battles if discovered.
What Are the Consequences of Hiding Assets/Income During a Divorce?
Financial Penalties
The most common consequence of hiding assets during a divorce is financial penalties. Depending on the situation, you may be required to pay your spouse’s attorney fees, court costs, or other fines related to discovering hidden assets. You may even be forced to pay back any money taken away from your spouse due to your actions.
Jail Time
If your deception is particularly egregious, you could even face jail time for contempt of court. This means that if you hide assets to keep them away from your spouse during the division of property, then you could end up paying a hefty price for it. It’s important to remember that hiding assets is illegal and can have severe consequences if caught.
Forfeiture of Assets
In some cases, hidden assets may also be subject to forfeiture. For example, if you hide money in an offshore bank account or transfer property without disclosing it in your divorce proceedings, then those assets could end up being forfeited by the court. That means that you will not only lose those funds or property, but they will also become part of the marital estate and will likely be divided between spouses in the divorce settlement agreement.
Divorce is complicated enough without worrying about financial disclosure, but unfortunately, it’s something that all divorcing couples must go through. You can confidently approach the process by understanding the basics of financial disclosure and your rights. And if you suspect that your spouse is hiding assets or income from you, be sure to speak with an experienced divorce attorney who can help you protect your interests. Give us a call today for a free 30-minute phone consultation.