Searching for Hidden Assets
Some spouses may attempt to hide assets from their partner in a divorce. Here’s how to find hidden assets in a California divorce.
Because community property is split evenly, spouses may attempt to hide assets so that they do not have to divide them. A spouse should begin searching for these assets first by gathering their financial information and determining whether or not all relevant balances and actions are normal. A spouse may also use the discovery process during the divorce to formally request certain information regarding assets and finances. In more complex situations, a spouse may consider hiring a forensic accountant.
Why Do Spouses Hide Assets in a Divorce?
Understanding why a spouse may want to hide assets in a divorce can be useful in determining whether or not they have hidden assets. California is a community property state, which means that property and debt acquired during the marriage are the equal property of both spouses. This is referred to as the community estate or marital property. In contrast, property acquired before the marriage or after the date of separation (in addition to gifts or inheritances acquired during the marriage) is classified as separate property. In a divorce, separate property will be retained by the spouse that owns it, while community property is split evenly between the spouses.
Related: Community vs Separate Property in California
The primary reason why spouses may hide their assets is that they want to reduce the amount of community property that is divided in their divorce. For example, if the couple has a shared bank account (community property), a spouse may slowly hide money by transferring that money to a family member so that they can keep more of the money after the divorce. A spouse may also hide their separate property because the value of separate assets can be useful in informing the court’s decision of how to divide certain property. In general, if a spouse has far more separate property than the other, then division will favor the other spouse.
Related: How to Protect Your Assets in a California Divorce
Informally Searching for Hidden Assets
If a spouse believes that their spouse is hiding assets as they head into a divorce, the first step should be gathering financial documents, searching through bank accounts, and observing the other spouse’s behavior.
Gathering financial documents (such as those regarding assets and debts) is not only a required part of the divorce process, but it can help inform a spouse about where they should begin looking. For example, a spouse may notice through this process that some assets are missing or have been unexpectedly altered.
Similarly, searching through bank accounts will help a spouse determine whether or not money is unexpectedly leaving the accounts. Search for slow drains, or money slowly leaving accounts in any unusual patterns. This search should include children’s bank accounts as some parents may attempt to hide their money in their children’s accounts.
A spouse’s behavior may also be indicative of hidden assets. For instance, a spouse may suddenly become far more secretive regarding financial information or bank accounts. Similarly, any changes in spending patterns should be scrutinized.
If a spouse discovers evidence of hidden assets, it is recommended that they contact a divorce attorney with expertise in hidden assets. In more complex situations, the attorney may recommend the hiring of a forensic accountant.
Formally Searching for Hidden Assets (Formal Discovery)
The other important step in regard to uncovering hidden assets is the discovery process. Discovery is a pretrial stage in a court case where both sides can request documents and other information. Discovery can be informal (such as merely asking the other side for information) or formal (such as written requests). This information is not filed with the court; it is merely shared with the other side.
If a spouse is still hiding assets at this point, it is likely that formal discovery will be more useful than informal discovery. Through formal discovery, a spouse may request information, request inspection, or obtain an oral deposition. If a spouse lies or misleads the court in this process, they could be held criminally liable.
Through formal discovery, a spouse or their attorney may request important documents such as tax returns and bank account information. With all the relevant documents and information obtained, it will be incredibly difficult for a spouse to continue hiding assets. The discovery tools provided in California are powerful, and an expert attorney can skillfully use them to ensure that no asset remains uncovered. If you are in need of legal assistance in your divorce case, contact Her Lawyer to be put in touch with a divorce attorney who has experience in uncovering hidden assets.
Consequences of Hiding Assets in a California Divorce
Hiding assets in a California divorce comes with serious consequences. It is always illegal to do so as the divorce process requires a complete and accurate financial disclosure from both parties. If a spouse is caught hiding assets, the potential consequences include:
- Payment of the investigator fees of the other party
- Being held in contempt of court, which can include fines and/or jail time
- Up to four years in prison (if caught lying under oath)
- The awarding of the hidden assets to the other party
- The loss of credibility in the eyes of the judge
- The resigning of their attorney due to loss of trust
- The voiding of all marital agreements, such as prenups
As such, the consequences of hiding assets in a divorce in California can be quite severe. Considering the fact that hiding assets almost never succeeds, anyone considering attempting to do so must think twice before they derail their divorce case and face criminal charges.
FAQs About How to Find Hidden Assets in a California Divorce
Why do people hide assets?
In a California divorce, spouses may be tempted to hide assets so that they are not divided in the divorce.
What assets are divided in a divorce?
In California, all community property and debt are generally divided equally in a divorce. This includes all property and debt acquired during the marriage, except gifts and inheritances or property purchased by separate money.
Where should I begin looking to determine whether or not my spouse is hiding assets?
A spouse should begin by gathering all financial documents and ensuring that everything is in order. They should also scrutinize bank account activity to determine whether or not there are any slow drains or unusual transfers. In addition, observing the behavior of the other spouse is important, because suspicious behavior regarding financial information can be indicative of hidden assets.
What is discovery?
Discovery is a pretrial process in which both sides may request information from the other side. Discovery can be informal or formal, and it can be used to acquire financial documents and other information that can uncover hidden assets.
Is it illegal to hide assets in a divorce?
Yes. It is always illegal to hide assets in a divorce in California. The consequences include jail/prison time, fines, and more.
If I think that my spouse is hiding assets, do I need an attorney?
While it is not necessary to have an attorney during the divorce process, it is highly recommended, especially if hidden assets are potentially involved. If hidden assets are discovered, you may request the court to order your spouse to pay your fees. Contact Her Lawyer if you are in need of an expert divorce attorney.
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