During divorce proceedings, spouses separate the lives that they previously shared. They must make arrangements to begin living separately. They divide their assets and financial obligations. If they have children, they must negotiate terms for a parenting plan that divides their parental rights and responsibilities.
When spouses don’t agree on the details, they can ask a family law judge to divide their property and address other unresolved disputes related to the practical implications of a divorce. Whether spouses want to settle outside of court or intend to litigate, there may be reason to worry about hidden assets.
Especially when spouses have a well-diversified marital estate, one spouse could misrepresent their resources or hide income from the other. How can such misconduct alter the outcome of a divorce?
Hidden assets diminish the marital estate
The goal of hiding assets is usually to prevent their inclusion in the property division process. People who underreport what their assets are worth, divert money to a hidden checking account or remove physical assets from the marital estate generally intend to keep more marital property than they might otherwise retain.
One spouse might agree to a settlement in an uncontested divorce that is unfair because they have not received accurate information about marital property. A judge might enter a property division decree that is not actually equitable because one spouse hid assets when making financial disclosures.
Hidden assets can alter litigation outcomes
People who suspect hidden assets may want to research the matter thoroughly. If they can identify attempts to misrepresent financial circumstances and undervalue marital property, they can potentially present that evidence to the courts.
Although judges usually do not consider marital misconduct for the purposes of property division, intentional financial misrepresentation is an exception to that rule. When there is proof that one spouse lied when making formal disclosures, the courts may consider the value of hidden assets and the intention to deprive the other spouse of that value when allocating marital assets and debts.
People preparing for divorce, especially those with complex marital estates, may need help finding hidden assets and addressing them appropriately. Securing a fair property division outcome may be easier when people have accurate information about the marital estate.