Financial disclosures are an important part of the divorce process. Spouses have to provide information to one another about their assets to ensure that they reach a reasonable conclusion to their negotiations. If they cannot agree on terms, then the disclosures they make help a judge divide their assets and debts.
Divorcing spouses typically need to identify all of their personal resources, shared property and financial obligations. Some people try to hide assets by keeping them off of their disclosure paperwork. They may open secret bank accounts to hide money. They may remove physical property from the marital home. They may also intentionally underreport the fair market value of their resources. These tactics may complicate the divorce process, making the divorce last longer and cost more.
What impact do hidden assets have on divorce proceedings?
Generating the need for a thorough review
When one spouse suspects the other of hiding assets, they typically cannot accept financial disclosures at face value. Instead, they may need to bring in a professional, such as a forensic accountant, to review their household financial records. Forensic accountants can help trace assets and incomes. They can also help value the hidden assets.
Preventing alternative dispute resolution
Financial misconduct is one of the red flags that make divorce mediation or an uncontested property division settlement dangerous. People who agree to specific terms without accurate information have few options for recourse if they later discover the misconduct of their spouses. As such, it is common for those who suspect or identify attempts to hide assets to litigate divorce to optimize their legal protection.
Altering what is fair and appropriate
Equitable property distribution can be somewhat straightforward in cases without complicating factors. However, judges who review evidence of financial misconduct, such as attempts to hide assets, may need to alter the property division decree to account for that misconduct. The outcome becomes less predictable, and judges may have to spend far more time reviewing the case to decide what is fair and appropriate.
People who suspect that their spouses may have hidden assets or might intend to do so in response to a divorce filing can discuss their concerns with their lawyers. Locating and valuing hidden assets can help people secure a fair property division outcome during a contested divorce.
