Those preparing for divorce typically expect the process to be fair. Especially if couples must litigate because they do not agree on key matters, they expect the courts to appropriately apply state law. For example, judges should look at marital property and debts to equitably or fairly divide them between the spouses during property division proceedings.
Sadly, not everyone receives a fair and just portion of the marital estate when they divorce. One of the factors that can skew the outcome of property division proceedings occurs when a spouse hides assets.
What impact can the intentional hiding of marital property have on divorce proceedings?
People can’t divide what they can’t locate
Hidden property comes in many different forms. Some people take money from each paycheck to fund a hidden bank account. They may do this for years even before they begin contemplating divorce. Other people may physically move property out of the marital estate to hide it. They might also omit valuable resources when disclosing their assets to their spouses and the courts. If hidden assets go undetected, the final property division decree for those spouses could be uneven and unfair.
The courts can punish those who misbehave
While misconduct usually has little or no influence on property division proceedings, certain types of misconduct can alter what a judge believes is fair and reasonable. Evidence that one spouse intentionally hid assets and lied about their circumstances might convince the courts to impose an economic penalty for that misconduct.
Therefore, those with complex marital estates preparing for high-asset divorces may want to go over financial records very carefully. In fact, they might even require the assistance of an outside professional, like a forensic accountant, to track down missing income and find discrepancies in financial records. In some cases, judges might penalize the spouse hiding assets by granting all of the hidden assets or property worth an equivalent value to the spouse who did not mislead the courts.
Given the profound impact that hidden assets can have on property division proceedings, finding them early in the divorce process, if possible, is often the best option available. Realizing that many people engage in financial misconduct leading up to a divorce may help people see the value of conducting a thorough financial review during their own lead-up to divorce.
