During divorce proceedings, each spouse is required by law to disclose all assets so they may be properly divided. Many people attempt to hide assets. If you suspect your partner of this behavior, there are a few things you should know to help you recover these assets and receive your fair compensation. Here we will discuss the methods people use to hide assets, the penalties for this action, the signs to look for, and what to do if you have found yourself in this situation. Your family law attorney will be able to help you with your specific case.
How Some People Going Through a Divorce Hide Assets
All assets, including real property, separate property, digital assets, and sources of income must be accurately represented in the disclosure. The spouses may choose to work together to form an agreement on how to divide the assets, but in cases of a contentious divorce, the court must intervene. Whether out of spite or greed, many people will go to great lengths to hide assets from their spouses. Here are some of the common methods people use to do so:
This is a simple, but effective method. If your spouse's new divorce was imminent, they may have taken regular withdrawals out of an account to literally hide the cash. If your spouse receives cash payments in their job, they may try to cheat you by not reporting the income or under-reporting their earnings.
Hiding Assets in a Business
If your spouse is a business owner they may attempt to hide assets in their company. This can be done through tactics like creating fake employees and funneling money through payroll into a hidden account. Some may also delay promotion or a large bonus until the divorce is finalized so the new income does not have to be reported.
Gifts or Trusts
A person may attempt to hide assets by gifting them to friends or setting up a trust for someone else with the intention that the assets will be returned after the divorce is finalized. Some may also move money into a family member or a new romantic partner's account. Occasionally, some will go as far as to set up a custodial account for a child in order to cheat their spouse out of money.
Undisclosed Investments or Accounts
Simply moving the money into a separate account or into an investment account without reporting it is another way to hide assets. If your partner is in control of the finances, they may open a new account or purchase stocks, real estate, or cryptocurrency without your knowledge, then attempt to hide that money and fail to disclose those accounts during the divorce process.
Another way to take advantage of the marital asset division process is to undervalue the physical property. They may report that cars, jewelry, antiques, etc. are less valuable than they actually are so that they can retain the high-value items while still making it appear like a fair division.
Purchasing Expensive Items
If your spouse was preparing for the possibility of divorce proceedings, they may begin to buy big-ticket items with the intent to return or sell them after the divorce. If they pay for these items in cash, it can be easy to hide. Or they may choose to disclose the possession, but grossly undervalue them.
What is the Penalty For Hiding Assets in a Divorce?
Nondisclosure or misrepresentation of assets is a huge deal in family law. In the state of Illinois, someone who engages in willful nondisclosure of marital property may be subject to the following penalties:
Contempt of Court and Perjury
If someone chooses to lie under oath during a deposition, they are guilty of perjury. Any action that impedes or obstructs the court can be considered criminal contempt of court. This includes hiding community property or refusing to testify if accused. Perjury and contempt of court are serious criminal offenses punishable by fines and jail time. If convicted, these crimes will go on a person's criminal record.
Fines and Jail Time
If found guilty of contempt of court or perjury, an individual is subject to serious legal consequences. In Illinois, perjury is a Class 3 felony that is punishable by a fine of up to $25,000 and up to 5 years in prison. Criminal contempt of court is punishable by a fine of up to $500 and 180 days in jail.
Change in Marital Property Distribution
The division of community property during the dissolution of marriage is supposed to be fair and equal. If a judge discovers that one party chose to hide or misrepresent the property, they may decide the fair settlement is to punish the guilty party by completely transferring ownership to the other party. That is to say, someone who attempts to hide assets may end up losing complete ownership of up to 100% of the assets. This is really up to the judge and depends on the severity of the case.
Signs That Your Spouse May Be Hiding Assets
If you have concerns that your spouse may be hiding or misrepresenting marital property, here are some warning signs to look for:
- Overpaying debts
- Taking control of financial accounts and payments
- Making expensive purchases
- Establishing a private post office box
- Making unknown payments
- Changes in withdrawals and deposit activity
- Purchasing gifts
- Lifestyle/Income discrepancies
- Becoming secretive about finances
- Change in business profits
These are a few of the red flags to look for if you suspect your spouse of deceitful behavior. Trust your instincts and make inquiries about the changes. Speak to your divorce attorney about these suspicions so they can help can guide you through the process.
Learn More: High Net Worth Divorce
Which Assets Are Typically Hidden or Forgotten?
Some types of marital property are easy to hide and others are simply easy to forget. Here is a list of properties that you should consider when disclosing your assets in the divorce:
- Overseas bank accounts and investment accounts
- Separate accounts
- Personal property like collections
- Timeshares and vacation property
- Safe Deposit Box
- Tax returns
- Retirement accounts
- Frequent flyer miles and credit card points
- Intellectual property
- Lawsuits settlements - especially if the lawsuit has not concluded
Your spouse may willfully not disclose any of these assets or they may have just forgotten. It's important to think of everything. A skilled Chicago divorce lawyer will be able to help you and ask all the right questions in order to uncover all property so that you may receive everything you're entitled to.
What to Do if You Suspect Your Spouse is Hiding Assets
The first thing you should do is speak to your divorce lawyer. Your attorney will initiate the discovery process. The discovery process is a series of requests for various types of information. The lawyer may request financial documents, bank statements, tax returns, and statements from your spouse's employer or business partner -- basically, any information that could lead to uncovering hidden marital assets. They may also enlist the help of a forensic accountant, who is trained in spotting misconduct in financial statements. You will also be required to cooperate with all requests during the discovery process.
How to Locate Hidden Assets
With the help of an experienced divorce attorney, you can work to locate hidden marital assets. Some of the following methods may be used in this process:
- Reviewing tax returns for accurate income reports
- Reviewing bank accounts for suspicious activity
- Reviewing credit card statements and personal loan statements for unusual payments
- Analyzing loan applications to find hidden income
- Examining business records to uncover misconduct
- Searching public records for property in their name
Taking an intense look into financial records may uncover discrepancies. Your spouse may attempt to make their tricks look legitimate, but a skilled family law attorney and a forensic accountant will be able to follow the paper trail and help you recover the hidden assets. The length of the process can vary depending on your spouse's willingness to cooperate. It's important to have an attorney with experience so you can receive the divorce settlement you are entitled to.
If you are undergoing a contentious divorce and suspect your spouse of malicious behavior, contact Tommalieh Law to begin your free case review today.