How Hidden Assets Can Complicate Property Division

One of the most complicated parts of getting a divorce is dividing property. Couples have to determine who gets vehicles, bank accounts, investments, homes, retirement accounts, businesses, and other valuable property. Unfortunately, when one spouse fails to disclose their assets or attempts to conceal their property, this can make the process even more difficult.

Hidden assets can make it challenging for both spouses and the court to fully determine the true value of the marital estate. This can create additional delays, disputes, and legal expenses. Understanding what a hidden asset is and how it’s addressed in court can help you better understand the property division process.

Understanding Hidden Assets

A hidden asset is a financial resource or property that one spouse intentionally fails to disclose. These assets can be under the single spouse’s name, under a joint account, or even transferred to another person, which makes it difficult to identify. Hidden assets come in many different forms, like investments, cash, bank accounts, cryptocurrency, business interests, real estate, and so much more.

It’s important to make a distinction that not every asset that one spouse doesn’t know about is necessarily being intentionally hidden from the divorce proceedings. Sometimes a property or account can be overlooked if the financial records are simply incomplete. However, if a spouse intentionally fails to disclose the property, it’s considered a hidden asset and can create serious complications throughout the divorce proceedings.

The Importance of Full Financial Disclosure

The property division process requires both spouses to provide accurate financial information about their marital estate. This allows the marital estate to be properly identified and valued for the proceedings. Financial disclosures include information about your bank accounts, real estate, investments, retirement accounts, income, and other assets.

If you’re not providing accurate information, it can be difficult to determine what assets exist and how property should be divided. Financial documentation is an imperative part of the divorce proceedings. Investment statements, tax returns, bank statements, loan documents, property records, business records, and other financial documents will help to establish the marital assets during your divorce.

How Are Assets Commonly Hidden?

There are many different ways that someone could potentially attempt to conceal assets. For example, they can transfer money from a joint account into a single account that the other spouse doesn’t know about. They could also temporarily transfer property to a family member or friend.

It’s possible for a spouse to attempt to undervalue property or simply fail to disclose a particular account during the divorce process. When it comes to spouses who are business owners, there can be additional complications when it comes to the financial disclosure process. Businesses have many accounts, expenses, receivables, inventory, equipment, and other assets. A court will always consider the specific circumstances when determining whether an asset is being intentionally concealed.

Hidden Bank Accounts

One of the most common assets that are concealed during divorces is bank accounts. Your spouse may have a money market, savings, checking, investment, or other financial account that you simply don’t know about. It’s imperative that your divorce lawyer pays attention to any transfers appearing on known bank statements to accounts that are unknown.

For example, there may be a large withdrawal that appears on a joint account without any explanation attached. Getting additional records can help you verify if it’s a legitimate transfer or an attempt to conceal marital assets. Just because there’s an unknown account doesn’t automatically mean that the asset is intentionally hidden. It’s important to understand the unexplained financial activity to determine if there was negative intent.

Hidden Business Assets

Businesses come along with many different assets, like inventory, equipment, bank accounts, vehicles, real estate, and so much more. Determining the actual value of a business requires having all the financial statements for the assets that the business owns. If one spouse owns a business and has access to the financial information but the other spouse doesn’t, this can complicate the disclosure process. In some divorces, you may need to bring in a professional to evaluate the business records and determine the overall value of the business.

Hidden Cryptocurrency and Digital Assets

With the influx of online investments, it’s no surprise that cryptocurrency and digital assets are some of the most common assets that spouses may try to conceal during a divorce. Many cryptocurrency accounts simply don’t appear in your traditional bank records. This is especially true if they’re held through different platforms or wallets.

Being able to identify digital assets may require reviewing a plethora of financial records, exchange accounts, transaction histories, and other documentation. Because the value of cryptocurrency can fluctuate significantly, determining its appropriate value requires careful consideration.

What Happens When Hidden Assets Are Discovered?

When a court determines that assets were intentionally concealed during the divorce process, the specific consequences depend on state laws. In many cases where hidden assets are discovered during the divorce process, they can be successfully divided depending on the situation. Many times, there will be additional legal proceedings or financial consequences associated with discovering the hidden assets.

If a divorce is already finalized after hidden assets are discovered, how the court handles it will vary. Some jurisdictions can allow divorce judgments to be modified or challenged when a large amount of undisclosed assets are later discovered. However, the requirements and deadlines will vary from state to state. This is why hiring an experienced divorce lawyer like the attorneys at Davis & Associates is imperative when it comes to dealing with hidden assets during or after a divorce.

Key Red Flags to Watch Out For

Whenever you’re going through a divorce, it’s important to be mindful of the key red flags that your former spouse may have hidden assets that they’re not disclosing. Unexplained withdrawals, sudden changes in account balances, missing financial records, unusual transfers, or even significant changes reported in their income are all problems. A spouse who suddenly claims that a valuable asset has no or very little value warrants additional documentation to support their statements.

Some other warning signs to look out for include an account being closed without an explanation, unusual business expenses, or even unexpected loans to family members. While none of these circumstances automatically mean that your spouse is hiding assets, they do all require further investigation.