Divorces work the best when both parties have access to the same information and can negotiate with each other based on that information. Transparency is typically a good thing, and a divorce setting is no exception to the rule. When you can agree with your spouse on what is being negotiated and the terms of a settlement can be reached it is much more likely that the settlement will be one that you all deem to be fair and one that will be followed after the divorce has been finalized.
However, every once in a while there will be a divorce case where one party will attempt to hide assets (or debts) from the other side. The list reasons why a person would want to do this are many, but the main reason is typically that a spouse does not want to subject their asset to be divided up in the divorce. This can be especially true in a state like Texas where community property laws make it so a spouse who did not contribute any work or money into a venture (like buying a piece of real estate) can nonetheless benefit and have a stake in ownership just based on their having been married to a spouse who made that purchase.
Another example of why a person may want to hide assets in a divorce is to do so in order to make it appear that their income is lower than it really is so that they will not be in the hook for paying child support or spousal maintenance in as significant a total as they ought to.
How can you avoid being put in this type of situation, where your spouse is hiding assets to your and your children’s detriment? Today’s blog post from the Law Office of Bryan Fagan, PLLC covers that topic and more.
How can a person hide assets in a divorce?
Unfortunately there are many creative ways that your spouse can hide assets from you during a divorce. For instance, if your spouse owns a piece of real estate in his name only he can transfer that property to another person like a family or friend by merely signing a quit claim deed. This can be done in a handshake agreement where the property will be transferred back to him after your divorce has been finalized. Often times the other person is paid a fee of some sort for holding the property while your spouse hides the property from you in your divorce.
Many people have valuable collections of artwork, memorabilia or similar items that are worth a substantial amount of money. These items are relatively easy to hide for a temporary period of time with friends or family members. There is no need to go through the trouble of even having to deed any of the property to the other person. Dropping them off without your knowledge is easy enough for most people to manage.
Do you and your spouse share a bank account together? In my years of representing folks in divorce cases I have learned that many spouses do not. In a divorce this can be to your detriment especially if you are the spouse who is a stay at home parent and has little to no access to the bank accounts that your spouse manages the finances for your family from. Withdrawals on large sums of money around the time that a divorce is flied are not uncommon. Once that money is out of the bank account it can be very difficult to track where it has gone.
You need to start paying attention to how your spouse uses money and if anything seems different about how your bills are paid (or are not paid), as well as anything else that is going on in your home. You may already be in a position where you do not have access to bank information but you cannot exacerbate this problem but being ignorant of what is happening in your own home. Pay close attention to see if anything seems “off.” If your spouse is spending money or withdrawing money in out of character ways you should take note of this and tell your family law attorney about it.
How can your spouse artificially decrease his income?
As I mentioned at the outset of today’s blog post, it is possible that he may attempt to hide income in order to claim to a court that he earns less money than he actually does. Child support and alimony are both calculated as a percentage of either his gross (alimony) or net (child support) monthly income so a decrease in income can mean a decrease in these future obligations.
If your spouse works a corporate job where he earns a consistent salary this may prove more difficult to do. Simply requesting bank records from the past few years can show if a consistent amount of money deposited into a checking account now appears to be significantly less right about the time that you have moved forward with your divorce.
Self employed persons have a much easier time of hiding income, however. Since your spouse pays himself it is possible that income can be distributed into reserve funds or other placeholders for your spouse to keep his income until your divorce is done. He may already be doing this in hopes of altering his rightful income. I have seen people work with their bosses in a small business setting to actually take less money for a period of time only to come back after the divorce with a “bonus” payment that just happened to be issued the day or week after a divorce has been finalized.
What can happen if your spouse does hide assets and is caught doing so?
There are some harsh penalties that your spouse may have to suffer through if he is caught hiding assets in your divorce case. Monetary penalties are just the tip of the iceberg as part as sanctions and fines that can be a part of your divorce if you are caught. Your spouse may be forced by a judge to give up ownership of an item due to their bad actions or may award a greater than fifty percent share of your community estate to you if it is determined that your spouse was attempting to take advantage of you. If it is shown that community income was wasted by your hiding assets then your spouse would likely have to pay that sum of money back to you over time.
Private investigators, forensic accountants, and utilizing discovery are just a few methods that you and your attorney can utilize in order to uncover hidden assets of your spouse. It will take additional time and money in order to do so but in the end it can be worthwhile to make sure that you have not left any stones unturned in your efforts to discover any and all property that you may have a right to in your divorce.
Finally, hiring a family law attorney who has experience in dealing with opposing parties who have attempted to hide assets is probably the most important step you can take to protect yourself and your family. It is one thing to know that your spouse is doing something underhanded like concealing assets or income from you during your divorce. It is a different subject altogether to be able to act on that knowledge and to be able to step in and do something about it. Having an advocate by your side to assist you in this endeavor can make all the difference in the world.
Questions about asset division in a Texas divorce? Contact the Law Office of Bryan Fagan
If you have any questions about this important subject or are just seeking clarification on something you’ve read please do not hesitate to contact the Law Office of Bryan Fagan, PLLC today. We offer free of charge consultations six days a week to discuss your case and circumstances with you. A licensed family law attorney on our staff will sit with you and address questions and concerns you may have in a comfortable and pressure free environment.