Divorce requires that people who have shared their lives find ways to separate them. That process requires an understanding of shared assets and potentially lengthy negotiations. When spouses can’t cooperate, they generally need to litigate. They ask a judge to apply the state’s equitable distribution rules to their shared property. The litigated property division process requires formal financial disclosures from both spouses.
Unfortunately, not everyone is honest during property division disclosures, even though the judicial system requires them to participate in good faith. Some spouses try to hide assets in an attempt to manipulate property division proceedings. What impact can hidden assets have on a divorce?
Causing an unfair outcome
If neither the courts nor the other spouse recognizes that hidden assets are an issue, then the final property division decree may be unfair. If one spouse fails to disclose valuable property, diverts money to a hidden bank account or undervalues their resources, their misrepresentation of facts can result in the courts establishing a highly unfair final property division decree.
Frequently, people who suspect their spouses of misrepresenting their financial circumstances take assertive steps to validate or eliminate those concerns. They may go over financial records at great length or may even hire forensic accountants to help them locate and value hidden assets.
Prompting a penalty for the dishonest spouse
Intentionally misrepresenting personal assets to manipulate court proceedings is inappropriate conduct that can open one spouse up to significant consequences. Provided that there is evidence of one spouse intentionally hiding assets during divorce proceedings, the courts can consider that misconduct when dividing the marital estate.
While marital misconduct in general does not usually influence the distribution of property, misconduct during court proceedings is different. In some cases, the courts may award a larger portion of the marital estate to the spouse who didn’t hide assets. In fact, they may receive the full value of the hidden assets as a means of holding the other spouse accountable and deterring others from following their poor example in the future.
Realizing that hidden assets can have a profound impact on divorce can influence how spouses navigate property division matters. People who suspect hidden assets may want to look into the matter carefully before agreeing to settle financial disputes. The act of hiding assets can drastically alter how the courts split the marital estate. Divorce litigation is often the best option available for people who suspect their spouses of intentionally hiding valuable property or financial accounts.
