Tag Archive for: marital assets

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.  

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Steps in Equitable Distribution

Equitable distribution is the term used in Pennsylvania as it relates to division of marital property in a divorce. Marital property will consist of nearly everything acquired in either party’s name from the date of marriage through the date of separation. Equitable distribution does not mean an automatic 50/50 split of all marital property. Instead, the statute on equitable distribution sets out thirteen (13) factors to be considered when seeking to set percentages for distribution on a case-by-case basis. In any divorce involving equitable distribution, the parties should first identify all the property to be considered. Specifically, Pennsylvania Rule of Civil Procedure 1920.33 discusses the requirement of each party filing an Inventory. The Inventory should list all marital assets and debts at issue. An Inventory must be filed prior to requesting a hearing on equitable distribution.

The second part of Rule 1920.33 goes over the requirements for a pre-hearing statement. This statement is to be prepared when your case is ready to go to court on equitable distribution (i.e. after you have grounds for divorce). Again, you will need to list all marital assets and debts, however, you should also include more detailed information regarding the assets and debts such as their values or balances at date of separation and present. Corroborating documentation should be attached to the pre-hearing statement as exhibits. Appraisals may be needed to confirm the fair market value of real property or defined benefit retirement plans such as pensions. Pre-hearing statements should be filed at least sixty (60) days prior to a scheduled equitable distribution hearing. It is important to work with an experienced family law attorney when dealing with equitable distribution matters to ensure all marital property is identified and subsequently submitted to the court in a timely fashion.

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Factors in Equitable Distribution

Equitable distribution is the term used in Pennsylvania referring to division of marital property at the time of divorce. Marital property will consist of nearly everything acquired in either party’s name from the date of marriage through to the date of separation. Equitable distribution does not necessarily mean a 50/50 split of all marital property. Instead, the statute on equitable distribution sets out 13 factors to be considered. Those factors are listed in 23 Pa C.S. 3502 and include the following:

(1) Length of the marriage; (2) Any prior marriage of either party; (3) Age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties; (4) Contribution by one party to the education, training or increased earning capacity of the other party; (5) Opportunity of each party for future acquisitions of capital assets and income; (6) Sources of income of both parties, including but not limited to, medical, retirement, insurance or other benefits; (7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as a homemaker; (8) Value of the property set apart to each party

(9) Standard of living of the parties established during the marriage; (10) Economic circumstances of each party at the time the division of property is to become effective; (10.1) Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain; (10.2) Expense of sale, transfer or liquidation associated with a particular asset, which expenses need not be immediate and certain; (11) Whether the party will be serving as the custodian of any dependent minor children

The remainder of 23 Pa C.S. 3502 goes on to discuss the courts powers relating to who can reside in the marital home pending the divorce, maintaining life insurance policies, interim partial distributions, and enforcement powers in the event of contempt of a court order on equitable distribution. Parties should keep these factors in mind when fashioning a settlement agreement of their own. If the parties have to go to court for equitable distribution, they will be required to submit a statement beforehand laying out what they allege is the marital property at issue, how the factors listed affect their case, and what they are ultimately seeking as an “equitable” distribution.

Click here to read more on Equitable Distribution.

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