Even in the midst of a contentious divorce, you like to think that the other side will be honest and fair. Unfortunately, this is not always the case. Hidden assets are common, with perpetrators hoping that they will be able to retain a greater share of the divided property — or reduce alimony payments down the road.
No matter the reason, hidden assets are damaging to the divorce process and must be uncovered to ensure that proceedings actually qualify as equitable. To shed light on this unfortunately common problem, we’ve highlighted details about hidden assets: how and why they occur, how they’re discovered, and how they’re ultimately dealt with.
Equitable Distribution in Florida
First and foremost, it is important to understand the role that equitable distribution is intended to play in Florida divorces. This is the state’s official approach to dividing assets during a divorce — and no, equitable does not mean equal. Rather, a variety of factors must be taken into account to determine whether the allocation of assets can be deemed fair.
What constitutes fair or equitable will differ from one case to the next, but often, key concerns that come into play include:
- Each spouse’s income or earning potential
- Previous career sacrifices made by one spouse to support the other
- How long the marriage lasted
- Whether either spouse has minor children at home
- Assets and debts held by each spouse
The final consideration from this list is often more important than spouses realize. Some, however, know exactly how influential their assets can be and, as such, make a concerted effort to hide a significant share.
Remember: the very tenets of equitable distribution are impossible to achieve if divorcing spouses are not honest about their financial situation. There is no way to allocate assets fairly unless both spouses, their attorneys, and the court possess a full understanding of exactly where the divorcing individuals stand, financially speaking.
How Are Assets Hidden?
Efforts to hide assets can prove surprisingly creative, although often, the simplest strategies are also the most effective. To that end, many divorcing spouses find it easiest to hide cash, especially if they are already living separately. This is made a lot easier when spouses earn a substantial portion of their income through tips.
A variety of other strategies may also appear, such as:
- Offering generous gifts to friends who are expected to return these funds once the divorce is finalized.
- Working with supervisors or managers at work to delay bonuses until after the divorce is complete.
- Buying expensive items (such as jewelry or artwork) in cash and then hiding those purchases with the eventual goal of selling them post-divorce.
- Making undisclosed investments, such as real estate or stocks.
How to Uncover Hidden Assets
Even in the midst of a painful process, divorcing spouses typically like to think the best of one another. Most trust that their spouses will be honest about their financial situation — and some mistakenly believe they have too thorough an understanding of their finances to ever allow for hidden assets. It can be shocking, then, to discover that there are significant financial discrepancies at play. These call for greater insight, including documentation and explanations from the suspected spouse.
Typically, the greatest insights into hidden assets arrive during the discovery process. At this stage, it is possible to request key documents, which can provide a thorough overview of both personal and collective finances — and a clear indication of any discrepancies.
Requests for production may provide access to insightful materials such as:
- Bank statements
- Pay stubs
- Tax returns
- Insurance documents
- Emails or text messages
Many spouses voluntarily make financial disclosures. This can be a sign of goodwill, but it doesn’t necessarily rule out the potential for hidden assets. These disclosures should be analyzed thoroughly to reveal whether any key documents or details are missing.
In some cases, a deposition may prove necessary. During this common legal proceeding, spouses must answer divorce-related questions while under oath. Court reporters transcribe these questions and answers to produce written documentation, which can be highly useful later on. Lying is punishable by law and, while there is no guarantee that spouses will be honest even in this situation, depositions remain a great tool for getting at the crux of ongoing financial issues.
Interrogatories represent a similar tool for discovery. These replace in-person questions and answers with written responses, which, again, take place under oath.
Depending on the complexity of the situation, digital forensics accounting could provide valuable insight. Accounting professional conduct thorough assessments, complete with records of debts, investments, bonuses, charitable contributions, and more.
What Are the Penalties for Hiding Assets?
The consequences for hiding assets can be steep, so this is absolutely not worth the risk — no matter how dire your financial situation may seem. Lying under oath can result in perjury charges, bringing a potentially criminal element to what should be strictly civil proceedings.
Other penalties, although less severe, are definitely worth avoiding. It is not uncommon for those who attempt to hide assets to be found in contempt of court. This could lead to significant fines or even harsher consequences.
At minimum, hiding assets will likely lead to a reallocation as soon as the deception is uncovered. This may be equal to the amount that the spouse attempted to hide. Beyond this, extra legal fees may be added to cover the additional expenses of discovering the hidden assets in the first place. In general, hidden assets complicate an already difficult divorce process and make everything more confusing and time-consuming than it needs to be.
Achieving Clarity With a Skilled Divorce Lawyer
From tracking down hidden assets to avoiding discrepancies that might cause unwanted complications, there is a strong need for detail-oriented legal representation throughout the entire divorce process. An experienced attorney can make a world of difference, ensuring that every step is completed according to Florida rules and regulations — and bringing all financial details out into the open. If the ultimate goal is an equitable and low-stress divorce, it is imperative to go about the process in as respectful and honest a way as possible. If you are going through a divorce contact please contact our office at 904-733-9080.