Hiding Marital Assets: Do the Numbers Add Up?
Divorce in New Jersey and Pennsylvania involves the equitable division of marital assets. If one spouse wants to keep more than their fair share, they may resort to hiding assets. This not only goes against family law and court procedures but, depending on the circumstances, could lead to criminal charges. So, how do you know if your spouse is hiding assets from you?
We see the best and worst in divorces. Some couples understand they are no longer a good match. They amicably and respectfully work with each other and go their separate ways. On the other end of the spectrum are those who see divorce as a battlefield where rules don’t apply to them, and they will do all they can to come out ahead. These are the people who hide assets.
What is Marital Property?
Marital property includes the property either spouse acquires during the marriage or with funds earned during the marriage. It also consists of the increased value of non-marital or personal property up to separation. It is not always clear when an asset is marital because couples may mix personal and marital assets during the marriage.
What is the Equitable Distribution of Marital Property?
Part of ending a marriage is equitably, or fairly, dividing marital property and debts. This does not mean assets will be evenly split. Usually, part of negotiating this issue will involve alimony payments. One spouse may be willing to get fewer assets in exchange for higher alimony or vice versa. Pennsylvania statute spells out several factors to be considered when dividing marital property.
Why Would a Spouse Hide Marital Property?
The spouse may try to keep as many assets as possible by misclassifying marital property as personal or hiding assets, so the other spouse does not know about them.
How Could a Spouse Hide Marital Property?
Their efforts are only limited by the spouse’s imagination. It is easier to do if the spouse owns a business, the couple has a lot of assets, or the spouse manages the family’s financial matters. Some common ways to shield assets include:
- A spouse may try to move cash from personal to business accounts if they own a business. The spouse may try to delay large contracts until the divorce is complete. The company may create “ghost” employees who do not exist or bogus expenses or asset purchases. What would appear to be a business expense is transferring money into bank accounts controlled by the spouse. A business could also make a fake loan to an entity that is just a front for the spouse.
- Money and other assets could be transferred to family or friends.
- A spouse may set up investment accounts and buy stocks or other investments in their name only and not tell their spouse.
- Physical assets like cars, artwork, or jewelry may be undervalued. If the other spouse accepts these estimates as accurate during the negotiation and the person keeps them, they are getting more value than they deserve.
If your spouse has lied to you about other aspects of their life, the fact they are hiding property should not be a surprise.
How Can We Find Hidden Marital Property?
If you have worked on as many divorce cases as we have, you develop an awareness of how a less-than-honest spouse may operate. Hiring a forensic accountant can be a good investment if your finances are complex or a business is involved.
Our most important information source is you. You can tell us about your family’s income, assets, and family-owned business. You can supply us with copies of documents establishing your family’s assets and your tax returns.
During conversations with your spouse or while negotiating a divorce settlement, you need to tell us if what we are told does not make sense. There is no point in dealing with a spouse acting in bad faith.
After the divorce complaint is filed, we can request information and documents from your spouse and their business. We can ask them questions during a deposition. Information and documents we obtain could be sent to an accountant for analysis.
Are There Penalties for Hiding Assets?
If a spouse is violating court rules and orders, a judge could take action in response. They may order the offending spouse to pay a larger share of their assets than if they acted honestly and order that they pay for our investigation and attorney time spent uncovering hidden assets.
The police could get involved if your spouse went so far as to commit crimes like forgery. If a spouse secretly makes money “off the books” without paying taxes, state and federal taxing agencies might be interested.
If you have any questions about equitable division or believe your spouse is hiding assets, please contact us here at Karen Ann Ulmer, P.C. We can discuss this and how we can help you through the divorce process.