Nobody wants to worry about his/her spouse hiding assets during a divorce. Unfortunately, the truth is, it still happens. Although illegal, spouses have hid marital assets during divorce and gotten away with it. In fact, marital assets get hidden and overlooked during divorce even when neither spouse is intentionally trying to do so. However, that doesn’t mean that it has to happen in your divorce.
Continue reading and you’ll discover:
- How to Tell if Spouse is Hiding Assets;
- The Top Hidden and Overlooked Assets in Divorce (including a free checklist);
- How to Uncover Hidden Assets during Divorce;
- What to Do if Spouse is Hiding Assets;
- What Happens when a Spouse Hides Assets during Divorce; and
- How to Prevent Hidden and Overlooked Assets in your Divorce.
How To Tell If Spouse is Hiding Assets in Divorce
The only way to know for sure that a spouse is hiding marital assets is to find hidden assets. Now, you’ve already taken the first step by becoming aware of the issue. Next, it’s helpful to be mindful of circumstances and situations that could make it easier to hide or overlook marital assets during a divorce.
If you identify with one (or many) of the following situations, you may have concerns about hidden or overlooked marital assets in your divorce:
- One spouse controlled and/or managed the bulk of the financial resources during the marriage.
- Both spouses kept their finances separate during the marriage (for example, separate bank accounts, retirement accounts, etc…).
- One spouse controlled and/or managed the bulk of the expenses during the marriage.
- One spouse doesn’t know about all of the marital assets.
- One spouse doesn’t know the value of each marital asset.
- Neither spouses understand what marital property is or realize what each spouse is entitled to in a divorce.
- Only one spouse understands what marital property is and realizes what each spouse is entitled to in a divorce.
- One spouse was solely in charge of doing the taxes during the marriage.
- Only one spouse worked outside the home during the marriage.
- One spouse is self-employed. (When there isn’t a W-2, it can be easier for a spouse to under-report income).
- One spouse initiated the divorce and it’s clear s/he has been privately planning the divorce for some time.
- One spouse is not being forth coming with bills, pay stubs, account statements, etc… even when requested by the other party.
- One spouse persistently insists that financial documents aren’t needed, and adamantly tries to convince the other spouse to trust his/her ‘word’ when it comes to reporting the amount/value of a marital asset.
- One spouse wants to quickly rush through the divorce, and is dismissive when the other spouse asks questions.
- One spouse tries to convince the other spouse that a divorce lawyer is not needed.
Top Hidden and Overlooked Marital Assets in Divorce
In addition to being mindful of your circumstances, it’s also advantageous to know the types of marital assets that are more commonly hidden during a divorce. In general, marital assets that have great value and aren’t easily visible/discoverable to the other spouse tend to be more tempting to hide.
Thus, some commonly hidden assets in divorce include (but is not limited to) the following:
- Bank accounts,
- Retirement accounts,
- Real estate, and
- Personal property of value (e.g., Jewelry, Expensive electronics, Equipment, and Tools)
In addition, just as significant as intentionally hidden assets during a divorce, is the issue of marital assets that are unintentionally hidden or overlooked during a divorce. Therefore, to discourage this from happening in your divorce, check out our infographic below for more commonly hidden and overlooked assets in divorce.
How to Uncover Hidden Assets in Divorce
If you believe the other party is hiding assets, it’s not uncommon to turn to the discovery process. In Minnesota, it’s illegal for either spouse to conceal or hide information from the other spouse during the divorce. The process of trying to find out information is known as, Discovery. In this case, discovery refers to the mandatory disclosure of information between a couple during a divorce. Discovery can be conducted both informally and formally.
Informal discovery is the most typical way that discovery happens during a divorce. An informal discovery is made by simply requesting information from the other side regarding the specific asset(s) of concern. Either spouse in the divorce can use informal discovery to obtain specific information from the other spouse. If the other spouse doesn’t comply with informal discovery by providing the requested information about the asset(s) in question, then formal discovery can be utilized.
As an alternative, formal discovery methods can be used when information isn’t being provided or the other side refuses to be upfront during the divorce. Like informal discovery, either spouse in the divorce can use formal discovery to obtain information from the other spouse. Formal discovery involves the drafting and serving of legal documents which clearly request information from the other side, including information about the asset(s) in question. One notable difference between informal and formal discovery is that during formal discovery, the other spouse may request information from the other spouse on ALL assets, rather than just information on the asset(s) in question.
Therefore, formal discovery is a much more comprehensive and thorough process. The legal documents that need to be drafted for formal discovery should be meticulously written and the procedures involved are very precise. If formal discovery is not done properly, it can be detrimental to your case. Therefore, most individuals who go through the formal discovery process have a divorce attorney. This way, the divorce attorney can help with drafting the formal discovery documents and serving them on the spouse or his/her divorce attorney for you.
As mentioned, Minnesota law discourages a spouse from hiding assets by requiring both parties in a divorce to disclose relevant information to each other. Unfortunately, if one spouse is unaware of the marital asset(s), s/he doesn’t know to look or ask. Likewise, a judge can only divide (fairly and equally) marital property that is known to him/her. Thus, if the parties haven’t listed all the marital assets, a judge can’t ensure a fair and equal division of marital property. Therefore, ultimately, it’s up to you to take steps to protect yourself against hidden and overlooked assets during a divorce.
What To Do If Spouse is Hiding Assets
A significant reason why spouses’ hire a divorce attorney if they believe their spouse is hiding assets is because the “burden of proof” falls on him/her. Meaning, it’s not enough to know that one’s spouse is hiding assets. The spouse that suspects the other spouse of hiding assets, has to show and prove it to the court.
Therefore, although it’s illegal to hide assets, the problem is, in order to prevent a spouse from hiding assets, the other spouse not only has to uncover the hidden asset(s), but also has to convince the court that his/her spouse:
- A. Transferred, encumbered, concealed or disposed of a marital asset;
- B. Without his/her consent;
- C. During the divorce or in contemplation of starting the divorce; and
- D. That it was not in the usual course of business/generation of income, necessities of life or preservation of assets.
(Minnesota Statutes, Chapter 518.58, Subdivision 1a).
What Happens If Spouse Hides Assets in Divorce
Thus, regardless of whether you hire a divorce attorney or not, it’s important that you realize what you’ll need to do if your spouse is hiding assets from you. The good thing is that it can be reassuring to know that the discovery process is taken very seriously. If your spouse fails to respond to formal discovery by disclosing the documents and/or information requested, the judge can issue formal sanctions (including contempt of court) against your spouse. In addition, if you can show and prove to the court that the other spouse hid assets, there are things the court can do to remedy the situation.
How to Protect Yourself from Hidden & Overlooked Assets During Divorce
As mentioned earlier, you need to be proactive when it comes to protecting yourself from hidden and overlooked assets during divorce. So, here’s what you can do:
- Learn about marital property. Know what’s considered marital property, and non-marital property. Find out what you’re entitled to in a divorce. Read: Marital Assets
- Be aware of common myths regarding marital property division. Read: 5 Myths about Marital Property Division in Divorce
- Be mindful of situations when hidden assets may be a concern.
- Be aware of marital assets that are easier to hide and common assets that are hidden or overlooked during divorce.
- Take inventory! Obviously, one of the best ways to prevent hidden and overlooked assets during divorce is by being aware of every marital asset that exists and knowing the correct value of each marital asset. Using a spreadsheet can definitely come in handy.
- Have financial documentation, hire third-party appraisers to value marital assets, and use informal and formal discovery processes when in your best interests.
- Get yourself a divorce attorney, who specializes in family law.
Hands down, the best thing you can do if you believe your spouse is hiding assets from you, is to hire a divorce attorney. Not only will a divorce attorney know what to look for (and where, for that matter), but s/he will know how to uncover and prove hidden assets with your best interests in mind.
Unbelievable as it may seem (given the stereotypes and portrayal of attorneys in popular media) you’re actually at the greatest risk for your spouse hiding assets from you when you or your spouse is not represented by a divorce attorney. Because although rarely portrayed in movies and tv, attorneys are actually held to a strict set of ethical rules. Such ethical rules include honesty and candor with the court in all legal matters. Therefore, many attorneys, rightfully so, are not going to be willing to risk their license, career, livelihood, etc… to help one client hide assets from his/her spouse when there has been a discovery request.
If you’re not sure if you need a divorce attorney, read: How to Determine if You Should Hire a Divorce Attorney. The article gives you an idea of the steps you’ll need to take if you’re representing yourself, what issues you’ll want to address in your divorce decree, and scenarios that favor a divorce attorney. In addition, if you decide to hire a divorce lawyer, there are helpful articles linked at the bottom that article to help you go about the hiring process.