Attempting to Hide Assets Before Divorce?

Hiding money & other assets in divorce is always a terrible idea.

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If you're contemplating a divorce, you may be concerned about how your money and property will be divided. If you have a significant amount of cash or assets, it can be very tempting to try and hide those assets from your spouse, especially if you're angry at your spouse or if you believe you worked for the assets and are entitled to keep them all.

Of course, hiding assets before divorce is a terrible idea- no matter how tempting it may seem- and it can get you in a whole host of legal trouble.

Hiding Assets Before Divorce

The primary reason people want to hide assets before divorce is because the law requires a split of marital assets when a couple divorces. Each state has a different set of rules for how assets and property are divided in a divorce, but generally, states can be categorized into one of two groups when it comes to how they divide property:

Community Property States

Community property states require a 50-50 split of all "marital assets," which includes any and all assets acquired by either spouse during the marriage. Money and assets you had before the marriage aren't included in a community property split unless you "comingled" or mixed them with marital assets.

For example, if you had $50,000 in your name before the marriage and kept it separate, it is yours. If you moved that $50,000 into a joint account holding marital funds and then used it to buy or improve a home, you've mixed the money and it will generally be considered part of the marital estate: however some states may still treat this as separate property with a right to reimbursement if you can trace it back to its separate property source.

The other exception to the general rule is that inheritances, gifts received during the marriage, and money judgments from personal injury claims all remain separate, and will not be considered community property (unless comingled). Again, there may be some legal distinctions depending on the particular community property state you live in. Check with a local attorney for more information.

Equitable Distribution States

Equitable distribution states aim to split everything up "equitably" or fairly, based on the particular circumstances of the marriage. Each spouse is entitled to a share, but not necessarily half. Courts in equitable distribution states will usually look at a variety of factors, including the length of the marriage and each spouse's contributions (both financial and on the home front) when determining who gets what.

Why You Shouldn't Hide Assets – It Can Amount to a Crime and You'll Probably Get Caught

There's a chance you'll get away with hiding assets to prevent them from being included in the community property or equitable distribution settlement. However, by hiding assets, you are taking a huge risk.

First, there is a legal process in all states called "discovery," which is a way for divorcing spouses to gather information from each other and third parties, including banks, companies, employers, 401(k) plan administrators and the like. During discovery, you (and third parties) will be compelled to turn over relevant financial information to your spouse (or your spouse's attorney). You'll likely be deposed, which means you'll have to provide live testimony, under oath, about assets and property. If you lie during discovery or your deposition in order to hide assets, you've committed perjury (a punishable crime). If your lies are discovered by your spouse, your spouse's attorney, or a judge, you may face severe sanctions (monetary fines) or a perjury charge.

Likewise, if you simply fail to report assets or provide financial information to your spouse during a divorce, a court can order you to do so. If you defy the court when it, for example, orders you to share account balances and the location of money, you can be held in contempt of court, which can mean jail time.

Although each state may have different laws about legal discovery and fines, most follow the general rules set forth in this helpful article, How to Find Hidden Assets in Divorce

Getting Help

Instead of hiding assets, get a good divorce lawyer. Your lawyer can help protect your interests and your assets, acting as your advocate to help you achieve the fairest divorce settlement possible under the law.

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By clicking "Find a Lawyer", you agree to the Martindale-Nolo Texting Terms. Martindale-Nolo and up to 5 participating attorneys may contact you on the number you provided for marketing purposes, discuss available services, etc. Messages may be sent using pre-recorded messages, auto-dialer or other automated technology. You are not required to provide consent as a condition of service. Attorneys have the option, but are not required, to send text messages to you. You will receive up to 2 messages per week from Martindale-Nolo. Frequency from attorney may vary. Message and data rates may apply. Your number will be held in accordance with our Privacy Policy.

You should not send any sensitive or confidential information through this site. Any information sent through this site does not create an attorney-client relationship and may not be treated as privileged or confidential. The lawyer or law firm you are contacting is not required to, and may choose not to, accept you as a client. The Internet is not necessarily secure and emails sent through this site could be intercepted or read by third parties.

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