During the divorce, property is distributed as evenly as possible. One spouse may not be able to receive exactly half of the property, which is why property division is often referred to as “equitable” as opposed to “even.” The court takes into account many factors when dividing property, including whether the spouse can support him or herself without the income of the other spouse.
The court can only distribute goods and debts equitably when it has a full understanding of all of the assets and liabilities from the marriage. The spouses themselves provide this information. Each spouse has an obligation to report their liabilities and property honestly and accurately. However, some spouses attempt to hide assets during the divorce process so that those assets are not divided. Hiding assets during a divorce is illegal and can result in contempt of court charges and fines.
If you suspect that your spouse is hiding assets, he or she may be engaging in the following practices or activities. Your attorney can help you confront your spouse about potential hidden assets if this is a concern during your divorce.
1. He or she acts secretive about finances.
It is not uncommon for one spouse to handle the bills or finances for the household. However, if the partner who normally manages financial aspects of the relationship suddenly starts to seem secretive or defensive about finances, that could be a red flag. It is especially concerning if he or she deletes financial programs or claims that the computer has crashed to avoid sharing financial information. In some situations, the spouse may also set up a private mail drop box or P.O. box to receive statements and bills.
2. He or she has significant unreimbursed business account expenses.
If your spouse begins to make large business purchases, that could be a red flag as well. A similar situation occurs when your partner starts making payments for taxes ahead of time. They may also be able to do this by overpaying credit cards as well. When a partner engages in this type of practice, he or she is essentially “loaning” money to another entity for a short time. Some individuals do this to decrease their income on paper in preparation for a divorce.
3. You find evidence of other accounts.
Many spouses who are attempting to hide assets will set up separate accounts without the other spouse knowing. Keep an eye out for statements from banks and credit card companies that you do not use. ATM receipts can also provide this type of evidence.
4. Your spouse increases his or her debts or makes large purchases.
Watch for indications that your partner owes family members or friends money for no real reason. Your spouse may also start buying large items or taking trips just to keep the money from being divided. In other situations, the spouse may purchase items that are worth more than they may seem, such as buying antiques as office furniture. There is a higher likelihood that these things will be undervalued in the divorce, and the spouse can sell them after the divorce is finalized.
It is unfortunate that many spouses choose to be deceptive or unethical before or during a divorce. However, it can happen, and you should keep your eyes and ears open. Contact Blair H. Chan, III, PLLC for more information about how you should handle assets during a divorce.