Hidden Assets In Divorce: How Often Does This Happen, And What Are The Consequences?

According to a story in Forbes magazine, a study conducted by the National Endowment for Financial Education found that 31% of adults admitted that they had been deceptive about money with their spouse. 58% of those surveyed said that they actively hid money from their spouse, while 54% readily admitted to concealing minor purchases from their partner. While these sometimes small deceptions seem relatively common amongst married couples, the concealing of assets can be a very serious matter in the event of a divorce proceeding.

It seems only natural that during a contentious time like divorce that one partner or both may seek to retain assets for themselves and through subterfuge, try to keep their partner from getting their hands on the property. The problem with concealing assets in a divorce is that you are required to sign a financial affidavit at the start of most divorce proceedings, and that affidavit is a sworn statement under penalty of perjury. During contentious divorce proceedings, the financial affidavit is required, and it may even be used in some non-contentious divorces, so both spouses are required to tell the truth when it comes to their money and other assets.

If a person signs the financial affidavit and intentionally fails to disclose certain assets, he or she may be held in contempt of court and may suffer additional penalties for doing so. In some cases, individuals have been forced to pay the other person’s attorney’s fees or have been required to pay heavy fines for concealing assets. In other cases, the spouse who tried to conceal assets was forced to forfeit all of them to his or her spouse.

The deliberate hiding of assets is not only a dishonest move but a petty one that can have serious consequences if discovered. So where are these hidden assets? Where are they most commonly placed? According to another story (again, by the super sleuths at Forbes), the most common ways to disguise or undervalue assets include:

  • Purchasing high-value items (like artwork or furniture) for an office, or adding more items to a valuable hobby-collection
  • Hiding cash in a safe deposit box or other location.
  • Underreporting income on tax statements (with the rationale that if the government doesn’t know about it, it can’t be brought up in divorce proceedings)
  • Overpaying the IRS in the hopes of concealing the money for the time being and getting it back as a refund later
  • Setting up accounts in other people’s names (friends, new love interests, or children are most common) to place large sums of money for concealment
  • Transfers of stock to “dummy accounts” or again, to accounts outside of the spouse’s scope or view

A skilled divorce attorney may be able to help you discover if your spouse is concealing assets in a divorce, and can most certainly advise you of the steps you need to take if your former partner is attempting to hide assets to prevent you from getting your fair share in the divorce proceedings. In the end, by paying attention to his or her actions during the process, you may be able to identify the signs that they are hiding something from you.


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Mediation and Arbitration: Your Possible Alternatives to a Messy Divorce

The divorce process can often be excruciating, but it doesn’t mean that it always has to end with resentment brewed by lengthy court trials. Couples that find themselves in disagreement regarding decisions involving child care, financial support, and property division can turn to divorce alternatives that can mitigate the stress caused by protracted divorce process.

Marshall & Taylor, P.C. enumerates two particular alternatives that can prove to be a huge help for divorcing couples looking to avoid unnecessary drama. These alternatives are called mediation and arbitration, and both have vast advantages to traditional court proceedings. The first option, mediation, allows divorcing couples to negotiate and resolve their disagreements outside the jurisdiction of the court. Instead, the entire process will be facilitated by a mediator. Unlike a judge, the mediator won’t be responsible for making any decisions for the couple involved in the process. What the mediator will focus on in encouraging open communication, fostering an environment that is conducive to productive dialogue.

Should a couple still find themselves unable to agree after attempts at mediation, they can move on to try arbitration. As the next step to mediation, arbitration allows divorcing couples to come to an agreement regarding high-stakes issues by allowing a third party to decide on their behalf. The appointed arbitrator will act just as a judge would when deciding on a contentious divorce. Unlike traditional divorces that are resolved through litigation, arbitration allows for a more relaxed environment that allows couples to continue their dialogue at their own pace. In arbitration, divorcing spouses are given the freedom to define their own divorce process. They are also able to set their own deadline when it comes time for the arbitrator to make a decision.

All in all, both these alternatives can prove helpful for couples looking to avoid the stress and emotional turbulence that could come with traditional divorces. Both meditation and arbitration allows couples to sort out their differences in a less hostile environment, giving them the chance to have a more open and amicable decision even after their divorce is finalized.

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