The Penalty for Hiding Assets During a Divorce

By Jim Thomas

During a bitter divorce, one or both parties might try to hide marital assets to benefit financially from the breakup and punish their spouse. If you are thinking about hiding assets, take a moment to reflect on what you're considering. Hiding assets is a reckless action. If you get caught -- and the odds are you will -- penalties can run the gamut, from a property settlement that allocates a much greater amount of the marital assets to your soon-to-be ex-spouse, contempt of court or criminal charges for fraud or perjury.

Marital Property

Marital assets are divided in accordance with either a community property or equitable distribution standard, depending on the state. In a community property state, marital assets are split 50/50 between spouses. In an equitable distribution state, the court starts with a presumption that marital assets should be subject to a 50/50 split, but allows parties to introduce evidence that they deserve a bigger share based on various factors, such as their large contribution to marital assets or the lesser earnings prospects of a spouse.

Hiding Marital Assets

Spouses have hidden assets in almost every imaginable way. For example, a spouse can transfer assets to a relative or friend through phony loans, bury cash in the basement, fail to divulge property he owns or launder cash through his business. If you suspect your spouse has hidden assets from you, there are a number of ways to flush them out. An investigator or forensic accountant can thoroughly examine income tax returns, public records and bill statements. Your attorney can submit questions to your spouse, through written interrogatories and oral depositions, in an attempt to find hidden assets. However, as a "The New York Times" article notes, although your suspicions might be justified, it's "what you can prove that counts."

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Civil Penalties

Asset-hiding spouses have been assessed court costs, ordered to pay the legal or private investigator bills of the opposing party, and had prenuptial or postnuptial agreements voided, which can cost the guilty party money. Judges tend to frown upon a spouse who hides assets. In a Washington State case, for example, a husband who repeatedly failed to produce current financial statements so angered the judge that he allocated 90 percent of the marital assets to the wife.

Criminal Penalties

Depending on the laws of your state, if you refuse to disclose assets or information requested by the court, you might be held in contempt of court, a misdemeanor which can result in fines or even jail time. If you lie about your assets in court, you might be charged with perjury for testifying falsely under oath. In California, for example, you can serve up to four years in jail for perjury. You might be charged with fraud, a criminal act, if a prosecutor decides to charge you with deceiving the other party by hiding assets. Penalties include restitution and jail time.

Post-Divorce Actions

Even if a spouse gets away with hiding assets during a divorce, he is still vulnerable if proof surfaces at a later date, especially since most divorce settlement agreements incorporate a clause requiring full disclosure of assets. But even in a simple agreement without such a disclosure clause, you are not protected if hidden assets are later discovered. The innocent spouse can petition to reopen the divorce settlement, which might result in similar penalties for the asset-hiding spouse had the concealment been discovered during the divorce action. The innocent spouse also could file civil charges against her ex-husband and request monetary and even punitive damages.

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What Are Sanctions in a Divorce Case?

References

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Oregon Admininstrative Rules for Divorce & Assets

Oregon offers a few options for divorce, which is called a "dissolution of marriage" in this state. Oregon is a pure no-fault state; you do not have the option to use fault grounds for divorce. Spouses who own no real estate and less than $30,000 in personal property qualify for a simpler divorce known as a "summary dissolution." If you own more than that, you can either file a co-petition for dissolution with your spouse, or you can file a regular petition for dissolution to begin the divorce process.

Discovered Marital Property After Divorce

Finding out after your divorce that your spouse hid assets from you can result in a decidedly sinking feeling, especially if those assets are of significant value. But your ex should experience the distress, not you. You have options to claim your rightful share while your ex-spouse faces potential punitive damages. Depending on where you live, it doesn’t always matter that your divorce is behind you.

Can a Man Give Away Marital Assets Without the Consent of a Wife in Michigan?

As long as you’re married, the court has no jurisdiction over your property, in Michigan or elsewhere. The law doesn’t and can’t govern what private citizens do with their assets -- unless fraud is involved. Even then, the court won’t intervene unless someone, usually the injured party, opens a lawsuit asking a judge to make the situation right. A divorce is one such litigation.

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