As a community property state, California divorces include asset division. This means a married couple going through a divorce must document their individual and joint financial accounts, properties, collectibles/toys of worth, etc., and divide them 50/50 or in some similar version they agree upon. 

Assets & Divorce: Don’t Hide Them

The division of assets is one of the most contentious aspects of most divorce proceedings. It’s one of the reasons we recommend pursuing mediation before hiring individual lawyers. In most cases, divorce mediation simplifies the process of asset division in a calm and methodical way. By keeping tempers under control, those tempted to hide assets due to anger or resentment opt not to.

Regardless, the ins and outs of your financial and other assets are all included in the divorce process.

Why People Might Be Hiding Assets?

Sometimes, a husband or wife finds ways to hide their assets to keep them out of the divorce proceedings. Unless they are assets owned before the marriage, part of an inheritance, or were previously isolated in a prenuptial agreement, hiding assets is illegal. So it’s understandable why some people are tempted to hide them. 

For example, if you didn’t take proper precautions to protect your small business before you married, your spouse may have rights to 50% of it, which can feel unfair (but is legally the norm). Maybe you worked side jobs for years, putting money away while your spouse never worked – you may think that money is entitled to be yours. Or, perhaps you always paid off all your debts while your spouse was a serial shopper and owes thousands you didn’t know about on credit cards. Shouldn’t you be entitled to more credits while he takes over his individually acquired debts? Unfortunately, that’s not how it works in a community property state.

Examples Of Hidden Assets

The reasons for hiding assets are numerous but resist temptation. Odds are you’ll find out, and you’ll be found out – and that can mean big trouble. Judges do not rule lightly on individuals who hide assets. In many cases, the judge bypasses the normal 50/50 split and awards the entirety or a significant portion of the hidden assets to the other party. Depending on how assets were hidden, individuals may spend jail time.

In most cases, hiding assets isn’t a matter of burying family suitcases of cash or establishing an account in the Caymans. Usually., it involves simpler but equally sneaky methods. These include:

Hiding, undervaluing, or understating marital property

Many couples live in a single home, share everything, and know about each other’s personal acquisitions. However, others live separate and independent lives within the marriage, which means they can acquire things of value their spouse is unaware of. 

Or, one person may be a collector and know that particular possessions or collectibles are worth far more than the spouse is aware. In that case, they may undervalue those and request them in the divorce proceedings – making it appear equitable. Their partner agrees, and the one who knows the actual value winds up with more.

Overstating debts

Some people may overstate their debts or withdraw cash through credit card advances. In that case, the debt is shared, but the liquid cash value remains in the possession of only one person. Sometimes people also claim debts they never had – like fake loans to a friend or family member.

Gifting money to friends or relatives

Maybe one spouse had a savings or investment account the other wasn’t aware of. They can liquidate those accounts, give the money to friends or relatives for the duration of the divorce proceedings, and then get them back when the divorce is final.

Hiding assets in a business

Business owners can easily hide assets; they can shelter financial assets, postpone lucrative deals, or create imaginary expenses or employees they’re paying – all to hide money that their spouse is equally entitled to. Sometimes people collude with fellow colleagues or employees and delay bonuses, or they pay willing accomplices (friends, family members, employees) for services never rendered – using that as an expense OR as a holding that’s returned after the finalized divorce.

Hiding financial accounts

It’s not uncommon in marriages for one person to handle all or most of the financial affairs. Then, as things begin to go south, or as divorce proceedings loom large, they may close accounts or fail to disclose the accounts on legal financial disclosure forms required as part of the divorce process. We’ve also seen cases where a client’s spouse created accounts in their children’s names, using their social security numbers, and then withdrew all of the money back after the divorce.

This list could go on and on. The point is that if you’re going through a divorce, and you suspect there’s any chance a spouse is hiding assets, take action.

How To Find Hidden Assets During A Divorce

There are several different ways to find hidden assets during a divorce.

Using your legal team’s support

As lawyers, we know what questions to ask and which documents to request to determine whether our clients’ suspicions are correct. In some cases, the individual automatically gives in, or the tax records, financial documents, or statements we request are the proof we need. 

Other times, we can have a client’s spouse undergo a deposition. This process is done under oath, and any evidence later on that the person was lying is punishable by law. This is usually enough to get most people to tell the truth. 

Private investigators have asset search techniques

If your spouse is particularly wily, you should invest in a private investigator specializing in asset searches. They use all kinds of software and forensic accounting techniques to locate accounts or records that may be challenging to get otherwise.

Hiring an appraiser

If the assets are tangible, and you know nothing about them (even “junk” your spouse wants in the divorce), an appraiser is an affordable and neutral way to learn the real value of everything you own between you, making for a much more equitable split. 

Work With An Experienced Divorce Attorney If You Suspect Hidden Assets

If you suspect your spouse is hiding assets in the divorce, contact an experienced divorce attorney immediately. The Law Offices of Gerard A. Falzone is here to find out if anything sneaky is happening and ensure your marital assets are divided as equitably as possible.