During a divorce, things can get pretty heated as the process progresses. Sometimes spouses make the wrong decision of trying to hide assets and funds in order to keep these things for themselves rather than dividing them in divorce. These actions are unethical and can have stiff legal consequences. State law differs on how assets are divided in divorce cases, but all states require full disclosure of each spouse's assets.
A financial affidavit is typically an early part of contested divorce proceedings, as well as some uncontested divorces. It's a statement designed to completely describe a spouse's financial status, including the spouse's assets, liabilities, income and expenses. In addition, the spouse swears to the honesty of the affidavit before the court. Knowingly swearing to a false affidavit is considered perjury. The penalty for perjury varies from court to court and state to state, but it can involve fines, payment of attorney fees and even jail time.
Hiding Funds Is Prohibited
In most jurisdictions, spouses are legally prohibited from hiding assets, transferring funds or in any other way limiting the other spouse's access to marital property. This is considered a violation of a restraining order that typically takes effect when a divorce is filed. Hiding funds during a divorce is strictly prohibited. This includes transferring property without the other spouse's consent, making extraordinary expenditures so there's less money to divide or cashing in and hiding insurance policy proceeds. In fact, an act as simple as changing a password to an iTunes account to prevent a spouse from accessing movies and music may be considered prohibited during divorce proceedings.
Innocent Spouse's Remedies
If an innocent spouse believes the other spouse is hiding assets, she can take a few actions, including hiring a forensic accountant to go through the financial ledgers in detail, looking for discrepancies. The innocent party can file an emergency motion asking the court to question the spouse about the assets or request a court order to prohibit the transfer of property. The innocent spouse's attorney can also use discovery procedures to request financial details from banks and credit card companies, or even request copies of the spouse's tax returns from the IRS.
Penalties to the Spouse and Attorney
If a spouse tries to hide funds during a divorce, he's not the only one who may face stiff penalties if his actions are discovered. If the spouse's attorney plays a role in the cover up, the attorney could be disbarred for unethical actions. Meanwhile, the spouse could face stiff financial penalties, including having to repay the hidden money, paying fines for his actions or even held in contempt of court for hiding funds.