Hidden assets in divorce more common than people realize
When businesses are involved, assets are more likely to be hidden
During a divorce it is standard procedure for marital property to be divided between both spouses. While that may seem simple enough, a problem often arises when it comes to determining what property is available for division. According to Forbes, a common tactic in divorce is for one spouse to try to hide assets from the other spouse as a way of holding on to a larger share of the marital property. Although such practices are illegal and can backfire in big ways, they are more common than many people realize.
When do people hide assets?
Although hidden assets can occur in any divorce, it is particularly common in high-asset divorces or divorces where a business is involved. Because such divorces are by their nature more financially complicated, there tend to be more opportunities to hide assets from a partner. According to a recent survey, nearly a third of spouses say they have misled their spouse about finances, meaning the potential for hidden assets existing in a large number of divorces is greater than many would like to believe.
One common indicator that assets may be hidden is when a business owned by one of the divorcing spouses suddenly records a drop in revenue and an increase in expenses. In many such cases, the owner is using the business to cover personal expenses.
Finding hidden assets
Full financial disclosure is required during a divorce and the consequences can be severe for those who try to mislead the court. If hidden assets are discovered then the guilty party can be subject to a number of punishments, including paying the other spouse’s legal fees or even giving up all the assets he or she had tried to hide in the first place. In the most extreme cases, jail time could also result.
In most cases, finding hidden assets will require the assistance of a forensic accountant who can look through financial records and tax returns for some common clues about hidden assets. However, not all spouses are necessarily overly clever about hiding assets. As the Huffington Post recently reported, it is becoming increasingly common for Facebook posts to be used as evidence in divorce court. The reason is because one spouse, claiming poverty, may end up posting pictures of shiny new cars and expensive yachts he has just bought, leading to questions about how “poor” he really is.
Hidden assets are just one example of how complicated a divorce can become and why it is so important to have qualified legal advice on hand throughout the process. An experienced family law attorney can help clients through all steps of the divorce process, including when it comes to dividing the marital property.