During the property division process of a divorce, spouses may need to make disclosures to one another and to the courts about their personal resources and financial obligations. They then either negotiate an appropriate settlement by cooperating with one another or litigate. They present a judge with information about their shared property and debts, and the judge decides how to distribute those assets and debts based on their understanding of marital circumstances.
Particularly in scenarios involving large marital estates, people can sometimes try to manipulate the process for their own benefit by hiding some of their resources from their spouse and the courts. What impact can hidden assets have on divorce proceedings?
Settlements may not be fair
Frequently, spouses hiding assets try to encourage out-of-court settlements with their spouses. Doing so protects them from claims of misconduct if the assets come to light later.
One spouse may agree to a very unfair and lopsided property division settlement because they are unaware of the hidden assets the other spouse has failed to disclose. They may accept terms that look fair on paper but are actually unreasonable given the full extent of the property available.
Instead of an equitable property division outcome, they end up with less than they deserve. They might also take on more marital debt than they should given the property that the other spouse retains.
Court intervention may be necessary
If one spouse discovers hidden assets midway through the divorce process, they can potentially gather documentation supporting their allegations. They can then ask the courts to consider that misconduct while dividing the remainder of their property.
Judges often do not appreciate attempts to sidestep financial transparency during a divorce. While they typically do not consider marital misconduct when dividing property, intentionally hiding assets is one of the few exceptions to that rule.
When one spouse has proof that the other intentionally hid assets from them and the courts, judges may consider that misconduct while dividing their marital property. Hiding assets is such a significant issue that it can provide grounds to appeal an unfavorable property division decree. Substantial hidden assets can warrant an in-depth review of a property division order.
Working with an attorney familiar with the challenges of a high-asset divorce and conducting a thorough financial review may limit the likelihood of financial misconduct negatively affecting the outcome of a divorce. Those with more resources may have more reason to be suspicious of the disclosures made early in the divorce process.
