Hidden Assets
California is one of a few states that divide marital assets according to community property rules. Each spouse receives one-half of the marital property unless a prenuptial or postnuptial agreement states otherwise. Therefore, it is tempting for some spouses to conceal assets during a divorce to prevent their spouse from receiving an interest.
California law requires spouses to file a full financial disclosure report during the divorce process. However, that does not necessarily mean your spouse will be honest when completing that process.
How Can You Find Hidden Assets in a Los Angeles Divorce Case?
If you believe your spouse is hiding assets, notify your Los Angeles divorce lawyer immediately. There are steps that your attorney can take to locate hidden assets. Ways to find hidden assets include:
Using the Discover Process
During a divorce, each party can use discovery tools to obtain evidence and information from the other party. Therefore, your attorney can submit interrogatories and requests for admission to your spouse. These questions must be responded to under threat of perjury.
Your attorney may also take a deposition of your spouse. During the deposition, your spouse must answer questions under oath. A court reporter records the testimony word-for-word.
Requests for production require your spouse to produce documents, including tax returns, loan applications, account records, and financial statements. If you believe your spouse is hiding assets in a safe, deposit box, or other location, your attorney may petition the court to inspect the contents for concealed assets.
The discovery process is a good way to obtain additional information and documentation about assets. However, your spouse might lie in hopes they can continue to conceal the assets without being discovered.
Hiring Experts To Find Hidden Assets in a Divorce
Your attorney might hire an investigator to look for hidden assets. Some investigators specialize in locating assets that people are trying to hide.
Another expert your attorney might retain is a forensic accountant. They are experts in analyzing financial information and accounts. Forensic accounts can assist in analyzing complex financial documents and transactions to identify concealed assets.
Monitoring Financial Accounts
You can help your attorney find hidden assets by monitoring financial accounts. For instance, you can trace activity in your accounts and cash flow to note patterns and deviations from those patterns that could indicate your spouse is hiding assets.
Pay close attention to a slow decrease in the amount of funds in your accounts. Your spouse might take small amounts over time to conceal cash.
Also, review canceled checks and charges to your accounts for changes in spending habits or unusual expenditures. If you do not know why an amount was withdrawn or paid, make a note for your attorney to request information from your spouse through discovery.
Common Methods for Hiding Assets in a California Divorce
There are many ways that one spouse can hide or conceal assets from the other spouse. Knowing some of the common methods for hiding assets can help you identify and locate hidden assets in your divorce.
Ways that your spouse might try to hide assets during your divorce include:
- Creating fake expenses for their business to reduce the value of the business and pocket the money paid for the “expenses”
- Taking case withdrawals on debit and credit cards
- Creating fake debts
- Overstating debts and personal expenses
- Making phone loans to family or friends who will hold the “payments” for the spouse until after the divorce is final
- Buying expensive gifts for family and friends who agree to hold the items under the divorce is final
- Overpaying tax bills to get a larger refund the following year
- Transferring assets into a private account that the other spouse is unaware exists
- Creating accounts in a child’s name to transfer marital assets until after the divorce is final
- Hiding assets overseas or in a business
- Selling assets to someone for less than they are worth so they can repurchase the assets back from the person after the divorce
- Deferring salary, commissions, or bonuses
- Changing the delivery method and/or address for billing statements and account statements
One of the best ways to prevent your spouse from concealing assets is to be involved in your family’s finances. Your spouse will have difficulty hiding assets if you are familiar with your community property and accounts.
What Happens if My Spouse Hides Assets During Our Divorce?
Willfully hiding assets in a divorce action can result in civil and criminal penalties in California.
Suppose you discover hidden assets during a divorce. In that case, the judge might order your spouse to pay the costs you paid to locate those assets, including fees for your attorney, investigators, and accountants. The judge could also award you a larger portion of the marital assets because of your spouse’s actions.
When a spouse lies on a financial disclosure, they can be charged with perjury. Perjury charges can result in jail time and fines. Depending on the severity of the acts, a spouse could face other criminal charges, including fraud.
Not All Assets Are Subject to Property Division in a California Divorce
Sometimes, a spouse might try to avoid community property division by claiming assets are separate property. Separate property is not subject to community property laws. Examples of separate property include:
- Assets owned by a spouse before the marriage
- Gifts from one spouse to the other spouse
- An inheritance received by a spouse before or during the marriage
- Gifts received by a spouse before or during the marriage
- Property acquired by a spouse after the couple has permanently separated
- Interest or income earned by a spouse on separate property
- Assets or earnings the couple agreed would remain separate in a marital agreement
Property classification during a divorce can be complicated. Separate property can become community property in some cases through transmutation. Likewise, a spouse might use various measures to make community property appear to be separate property, such as giving marital funds to a friend to purchase an expensive gift for the spouse.
A knowledgeable Los Angeles property division lawyer understands the complex nature of separate property and how to prove that property your spouse claims as separate is actually marital property.
Schedule a Consultation With Our Los Angeles Divorce Lawyers
It is crucial that your spouse discloses all assets so you can obtain a fair share of the marital property under California community property laws. Our legal team at Berenji & Associates diligently searches for assets your spouse might try to conceal. Contact our law firm for a consultation to discuss your situation with a Los Angeles divorce attorney.