Divorce settlement laws vary by state, but one law is true everywhere in the United States—hiding assets during a divorce is illegal and can result in serious consequences. Even so, many people going through a divorce attempt to hide assets from their soon-to-be ex. Here, the Maryland divorce attorneys at Snee, Lutche, Helmlinger & Spielberger discuss why you should not be liquidating assets in the midst of a divorce.
Liquidating Assets Can Make a Financial Affidavit More Difficult
A legal document called a Financial Affidavit or Financial Statement requires both spouses to disclose all financial information. Spouses must disclose not only assets, such as income from salaries, stocks or businesses; but also liabilities such as debt from credit cards, loans, or mortgages. The Financial Affidavit is used by the Court to determine how resources and debt should be divided. It is also used to determine the amount of alimony or child support that is paid.
Reasons to hide assets during a divorce may include revenge, greed, fear or not having enough to support oneself, or fear that the other spouse is also hiding assets.It’s important to be aware of the most common ways people hide assets during an impending divorce to help prevent the problem and ensure a smoother divorce process. Hiding cash is probably the easiest way to hide assets because it is more difficult to trace. Safes, deposit boxes, under the mattress, or at the office are popular locations to hide cash without a paper trail.
Hiding Assets from Your Spouse Can Lead to Additional Legal Repercussions
Spouses may also create new bank or investment accounts to hide assets during a divorce. Stocks, bank balances, and other investments can be transferred to a family member, business partner, or dummy account and then retrieved later. Assets can also be hidden in new retirement accounts, municipal bonds, traveler’s checks, or savings bonds. These financial statements often are mailed to the home address. A change in regular delivery could indicate that marital assets are being diverted.
Another way assets are hidden during a divorce is through underreporting income. A spouse’s income or the value of his or her business can be underreported until the divorce is final. A sudden decrease in a spouse’s salary could indicate that bonuses or commissions are being held for future distribution. Underreporting the value of the business can be done by not signing new clients until after the divorce or by paying non-existent employees.
In addition to underreporting income, undervaluing property is another way of reducing a spouse’s bottom line on the Financial Affidavit. Assets such as jewelry, collections, or artwork can be easily undervalued, hidden, or diverted. Lastly, it is possible that a spouse could over pay certain creditors, loans, the IRS, or even a family member could “hold” a loan payment for the spouse. Presumably after the divorce, the spouse would receive a refund which would not be reflected in the Financial Affidavit.
How SLH Can Help Guide You Through the Divorce Process
The risks of hiding assets in a divorce outweigh the returns. Spouses who hide assets could be found guilty of perjury for lying on the Financial Affidavit. Some penalties are more severe. In some cases, the judge may award the full amount of the hidden assets to the other spouse plus any related reasonable attorney’s fees.
Unfortunately, it is usually the party with more financial resources that is hiding the assets and the party with fewer resources that must prove this claim. Someone who suspects that his or her spouse is diverting or hiding marital assets should consider the counsel of an experienced divorce lawyer who can help prove the claim. A divorce lawyer can help the client create a lifestyle analysis which provides the court with the couple’s spending habits and living expenses during their marriage and could ultimately achieve a fair divorce settlement.
For more information, please contact the Bel Air divorce attorneys at SLH by clicking here: https://www.slhslaw.com/contact/