HIDING ASSETS IN A DIVORCE
Imagine that you win millions of dollars in a lottery. Your spouse did not have a ticket. A month after you win, you file for divorce. You never disclose that you won the money or the amount of your winnings.
Well over a year after the divorce, your former spouse receives a letter offering a sum payout for the lottery winnings. Your former spouse goes back to court. They ask, and are awarded by the judge, not just a share of the winnings, but the entire amount. This is a true story that happened to a wife who failed to disclose her lottery winnings in her divorce proceedings.
Duty to Disclose Assets
In a divorce preceding that involves a dispute over property, both parties have a duty to disclose their assets and debts. This allows the court to understand how to divide property, and award spousal support and attorney’s fees. The court takes this obligation very seriously. If a party intentionally attempts not to disclose his or her assets, the action may result in severe penalties.
The particular rules for disclosing assets vary between states. All states require that in a divorce involving a dispute over property, both parties disclose their assets. Many states also require that both parties provide an estimated value of non monetary assets. If the parties cannot put a value on their assets, the states ask that the parties give their opinions on whether the asset belongs to one person or is shared marital property. If both parties have not made proper disclosures, most states will not even allow the parties to obtain a judgment based on a marital settlement agreement.
What You Must Disclose
Disclosure of assets is considered so important that some states, such as California, require more than one disclosure. In California, the first disclosure must be at the beginning of the divorce. This disclosure is called the Preliminary Disclosure. The disclosure near the end of the judgment is called the Final Disclosure. The purpose of California’s multiple disclosure requirement is to make sure the court can consider assets and debts that predate the divorce and assets and debts that the parties acquire during the divorce. In most states, assets acquired after separation will be considered separate property. In community property states such as California, there may be exceptions. In community property states, assets acquired after separation may still be considered with regard to support and attorney fee orders.
Penalties for Failure to Disclose Assets
The penalties can include changing the divorce judgment and awarding 100% of the hidden asset to the other party. Some states do not leave it up to the judge to decide what to do when an asset is intentionally hidden. By statute, they require a judge to award 100% of the hidden asset to the injured spouse. Hiding assets can have serious consequences, and result in the opposing spouse getting more than they would’ve gotten had the assets been properly disclosed.
While winning the lottery may seem to be an unusual situation, the issue of asset disclosure is a part of every divorce that involves a property dispute. When one or both of the parties owns a business, hidden assets may become a great concern. Hiding assets in a divorce proceeding is risky. It can have severe penalties. A qualified family law attorney will help you make the disclosures required under your state’s law. Your family law attorney will also work to require your spouse to do the same. That way you will receive a fair and final divorce judgment.
Reference: Free Advice, Legal, Family Law