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Hiding Assets

There are many reasons a person might want to hide assets in a divorce. One of the main reasons is to reduce the amount of the divorce settlement, child support, or alimony that would be paid to a spouse. Another reason is to “get even” with a spouse who files for divorce by hiding assets so that they are not considered during the settlement phase of the divorce.

However, hiding assets usually involves lying under oath in court, and that can lead to some serious penalties. While contempt of court and perjury are certainly serious charges, there are also financial considerations.

A court case from 1999 illustrates this point well. A California woman deliberately withheld from her husband that she had won $1.3 million dollars in the lottery. A Los Angeles family court judge determined that she had violated state asset disclosure laws for failing to disclose this fact when she applied for divorce only 11 days after winning.

Because California is a community property state (Florida is not), if this woman had disclosed the information, he would have been entitled to half of the proceeds from the winning lottery ticket. Instead, because the woman tried to hide these assets, the judge awarded the entire $1.3 million to the woman’s ex-husband.

A similar case in Michigan involved a man who deliberately hid assets during the primary trial period of his divorce. The assets were discovered after the divorce was finalized, forcing the court to reconsider the property division. Once all was decided, the court awarded the ex-wife all of the discovered assets.

It never pays to hide assets. Still, many spouses attempt to do so. Here are some warning signs that your spouse may be attempting to hide assets:

  • Transferring Assets – this is the most obvious attempt at hiding assets. An individual will transfer funds from a joint account into an individual account
  • Giving it to a friend, sibling, or another family member – A person can slowly transfer assets from a joint account to a friend or family member. This can be done in small increments over time, making it less obvious than transferring money in bulk
  • Purchasing expensive toys, jewelry or art – Buying these items is a way of putting money into something that may be overlooked when assets are uncovered. They can then be sold at a later time.
  • Unresolved debt or hidden “business” expenses – If your spouse is owed a large debt or is awaiting payment on a commission, but keeps delaying it, this is a warning sign that he or she may be hiding assets. Another similar tactic is to disguise personal expenses as business expenses in an attempt to devalue assets and lower settlements, child support, and alimony
  • Makes frequent trips to countries with relaxed banking laws – It can take time to launder a large amount of money. Frequent trips to countries that have relaxed banking laws may be a warning sign that your spouse is attempting to hide assets there.

While there are many ways that your spouse can attempt to hide assets, your attorney and the court system are provided with many differing ways of uncovering those assets. It may be enough to simply remind them of the consequences to get them to come clean.

Divorce

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