What Is the Statute of Limitations for Hiding Marital Assets in a Divorce?

By Mary Jane Freeman

Courts rarely re-open property settlement orders following a divorce. However, many judges will do so if it is later discovered that a spouse intentionally hid assets. Generally, the case must often be brought soon after the divorce judgment.

Community Property vs. Equitable Distribution

Depending on the state divorcing spouses live in, property acquired during the marriage - known as marital property - will either be split equally or equitably. A handful of states, such as California and Arizona, are community property states, which means marital property is split 50-50 between spouses. However, in the remaining states, including New York and Florida, marital property is equitably distributed. This means it is divided in a manner that is fair and just, but not necessarily equal, so divorcing spouses can walk away with uneven splits, such as 60-40 or 70-30.

Hiding Assets and Statute of Limitations

Once spouses divide marital property in divorce, the terms of the property settlement are final. As a result, courts rarely re-open this portion of a divorce case, usually only doing so when there has been serious misconduct on the part of a spouse, such as fraud. If a spouse intentionally hid assets during a divorce, this may be sufficient grounds for a court to re-open the divorce case and set aside the original property settlement and substitute a new one. How long a spouse has to make this request depends on state law. For example, in Massachusetts, a claim must be brought within one year after the judgment; in Colorado, within five years after judgment; and in Wisconsin, within one year from discovery of fraud.

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The Penalty for Hiding Assets During a Divorce

References

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