Divorce can have a huge impact on both spouses' finances and has led many spouses getting divorced to try and hide their assets. Hiding assets has become more common in divorces today so it is important for individuals to know the signs and consequences of hiding assets during divorce.
Both spouses are legally required to disclose all assets, which includes income, expenses and debt. When spouses hide their assets, they are usually trying to keep some of the marital property from being divided during the divorce.
Despite the requirements for spouses to disclose all assets, more and more spouses are admitting to hiding or lying about their assets. A report by the National Endowment for Financial Education found that 31 percent of spouses who share their assets admit to lying about money. The study also found that 58 percent said they hid cash from their spouse and an additional 30 percent had hid a bill or financial statement from their spouse.
With the increase in spouses hiding assets, it is important for people to know the common ways assets are hidden during divorce. The most common ways spouses hide assets are listed below:
- Hide, understate or undervalue martial property
- Overstate debt
- Report lower income
- Report higher expenses
Spouses who do lie about their assets during divorce can face serious consequences. There are severe penalties for lying under oath and violating disclosure laws. In some cases, spouses who have lied about their assets have been forced to pay for their ex-spouse's attorney fees. Others have been subjected to their claims being dismissed and all the property has been awarded to the other spouse.
Dividing property and assets can be a complicated matter. Individuals going through divorce should work with their own attorney to discuss their options and understand the ways their finances will be impacted by their divorce.
Source: Forbes, "What Are the Consequences Of Hiding Assets During Divorce? " Jeff Landers, Nov. 14, 2012