Hidden Assets: Is There a Penalty for Hiding Them in Divorce?

One of the biggest divorce fears and actual dangers for women is the risk that her spouse will hide assets from her if they split, and she will never know. In a recent Wall Street Journal article, Liza Caldwell, the founder of SAS for Women, was interviewed on the topic  “Five Common Mistakes People Make When Getting Divorced”. Let’s just say we consider all five mistakes to be worthy of exploring for anyone going through or even contemplating divorce. However, this post will focus on one of them in particular: hidden assets, and whether there is a penalty for hiding assets in divorce.

How Are Assets Hidden?

Divorce always reminds me of the circus performer who has to keep multiple plates spinning on poles. Their eyes have to be everywhere, looking out for the ones that start to wobble. Now and again, they miss one and it goes crashing to the floor. Similarly, especially in high-pressure situations such as divorce, there are a lot of spinning plates. People sometimes forget or overlook certain financial assets, thinking they aren’t relevant—but others deliberately hide them. With the final divorce settlement approaching, some can’t resist the temptation to take from their soon-to-be ex, depriving their partner while padding their own nest.

One way they do this is by temporarily hiding funds or assets to avoid them being shared out.

It’s a simple enough scam.

An individual transfers their funds to a family member or a friend, or perhaps, a different bank account. Then, once the settlement is finalized and the heat dies down, the friend or family member returns the money, giving the dishonest Ex an unexpected windfall. Legal experts say many business owners attempt this since it’s much easier for them to hide money when a couple keeps separate finances.

Of course, this works both ways, so let’s look at your responsibilities as well as any signs to look out for if you feel suspicious of your spouse.

What Exactly Are Assets?

During a divorce, both parties must declare their assets; a process known as financial disclosure. What exactly do we mean, and what are the assets you should be aware of?

Basically, a matrimonial asset is any item of monetary value that is acquired during marriage. The most obvious ones are the family home and savings. However, it also covers everything from your income, and any business interests and investments, to any liabilities you may have.

Don’t Forget About Pensions and Other Financial Details

Each partner must also give details about their pension, both state and private.

It regularly happens that pensions make up the second most valuable asset in a marriage, and in some cases can actually be of more value than the house itself.

Just like people, pensions are complicated too, so it’s best to see an expert rather than try to settle things yourself. Who is that expert? It begins with a divorce attorney and may involve a certified divorce financial analyst or a forensic accountant. (We’ll say more on forensic accountants below.)

Make sure you declare everything, even any offshore assets or bank accounts if you have them. If you or your spouse deliberately holds back any information, it could complicate and prolong the divorce proceedings.

I can remember my old teacher once lecturing me about honesty being the best policy—much to my embarrassment. Don’t let dishonesty about your finances trip you up; the consequences can be more than just embarrassing. Judges and lawyers are experts who deal with cheaters every day and know exactly how to spot them. If they suspect any shenanigans, they could well delay the decision, and in some cases, involve the services of a forensic accountant. Remember that courts have the power to consult your personal accountant, financial advisor, and even your bank manager.

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Whether you are the higher-income producer or your spouse is, if you are thinking about divorce, it would be smart for you to learn what is alimony.

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Does Your Spouse Have Hidden Assets?

Okay, so you’ve been honest and truthful about your financial position, but how can you be sure that your spouse is sticking to the same playbook?

If your Ex has a history of dishonesty with you or others, it’s understandable to assume the worst when it comes to honest and transparent financial disclosure during divorce.

Try to keep abreast of money matters and trust your intuition. Do you sense that something isn’t quite right? What are the red flags to keep an eye out for?

Many women have said that their spouse seemed touchy, maybe even angry, when they tried to broach the subject of money. One woman told me that her husband would make light of it and quickly change the subject. Others have said they can’t discuss anything of any depth; theirs is such a toxic marriage. This kind of behavior should start alarm bells ringing, so it might be worth digging a little deeper. Similarly, if out of the blue they begin a new business venture while you’re still in the throes of divorce, this too should raise your suspicions. Could your spouse be using this new project to conceal their assets deliberately?

Another area to be aware of is whether your partner is earning money on the side that they do not report. One often overlooked area is cryptocurrencies. Some of the most popular ones are Bitcoin, Ethereum, USD Coin, Tether, and Dogecoin; you must also declare these as part of your financial disclosure.

Is There a Penalty for Hiding Assets in Divorce?

Don’t be fooled—deliberately hiding assets in divorce can have serious consequences. When the truth comes out during divorce proceedings, the court can permanently damage a person’s reputation and issue an unfavorable judgment. Judges may also freeze assets or issue injunctions.

If someone hides assets and the truth surfaces after the final settlement, the court can reopen the case, require the guilty party to cover all legal costs, and, in extreme cases, sentence them to jail.

What Can You Do If You’re Suspicious Your Spouse is Hiding Assets?

If divorce seems likely and you suspect your partner may be hiding assets, start taking action now to protect yourself. File for divorce first—doing so allows you to request an equal division of any assets discovered, even after the final settlement.

If they’ve already beaten you to the punch, there are still some options open to you. Some decide to hire a private investigator or forensic accountant. A forensic accountant specializes in financial anomalies and fraud, often working alongside lawyers and called upon to provide reliable evidence in court.

If at all possible, sometimes an open and frank conversation with your soon-to-be-ex can take away a lot of the stress and worry. It’s far better to straighten things out sooner rather than later, instead of chasing a financial claim years after the court settles the divorce.

While this piece has looked mainly at identifying hidden assets, there is something else that is worth mentioning. As well as hiding assets, is your spouse secretly keeping any debts from you? This could be anything from credit cards and loans to tax payments. If you hold a joint credit card, check it regularly and resolve any issues early to avoid financial headaches later on.

If you are looking for other things to know and do, we encourage you to check out our divorce checklist designed for women like you, thinking about divorce or stepping into the process.

A Helping Hand

Due to their very nature, it can be very easy to forget about tedious or complicated things like pensions and bank accounts while going through a traumatic experience like divorce. It’s like being under the spotlight while you’re doing your level best to keep those plates spinning, both practically and emotionally. If you are too afraid to divorce, but fear something is happening, we urge you to have a consultation with a divorce attorney. If that step is too daunting, consider a free consultation with SAS for Women. This women-only divorce coaching organization offers support and guidance to help you get educated and empowered.

We hope this article has provided a bit of background information on how to cover all your financial bases when it comes to divorce. To read the original Wall Street Journal article on the “5 Financial Mistakes People Make in Divorce”, and the advice from SAS for Women Cofounder, Liza Caldwell, read here.

NOTES

If you are thinking about divorce or dealing with it, one thing we see making a significant difference for women is the conscious choice not to do it alone.

Since 2012, smart women around the world have chosen SAS for Women to guide them through the emotional, financial, and practical experience of breaking up and reinventing. 

SAS offers all women six free months of email coaching, smart steps, action plans, checklists, and support strategies for you — and your precious future. Join our tribe and stay connected.

 

*We support same-sex marriages. For the sake of simplicity in this article, however, we refer to your spouse as your “husband” or a “he.”