What's the Penalty for Hiding Assets in a Divorce?

If you're thinking about getting a divorce, you may worry about how the court will divide your assets, including your money and property. If you have more assets or make more money than your spouse, you may consider hiding your assets, so not as much property or money will go to your soon-to-be ex. However, this deception could have serious consequences.

Penalties for hiding assets in a divorce

No matter what, hiding assets during divorce proceedings is a terrible idea. If you hide assets and they are later discovered, the court can issue serious consequences. Here are five of the most common penalties.

• Contempt of court: The court may impose fines as a penalty for contempt of court for disobeying the court order to fully disclose assets. In severe cases, particularly if the party continues to disobey court orders, the judge may order imprisonment for contempt of court.

• Legal sanctions: The court may order the party who hid assets to pay the other spouse’s attorney fees and court costs incurred due to the misconduct. Additionally, the court may impose added fines as a punitive measure against the party hiding assets.

• Adjustment of the division of assets: If the court discovers hidden assets, it may award a larger share of the marital assets to the other spouse as compensation. In extreme cases, the court may order the hiding spouse to forfeit the entire hidden asset to the other spouse.

• Perjury charges: If the party hiding assets lied under oath or in official documents, they could face perjury charges, which is a criminal offense. Conviction of perjury can lead to fines, community service, or even imprisonment.

• Reopening the case: If hidden assets are discovered after the divorce is finalized, the court may reopen the case to redistribute the assets and impose additional penalties. Then, the judgment may be modified to reflect the newly discovered assets.

Reasons for hiding assets

A common goal for hiding assets in a divorce proceeding is to prevent the reduction of your assets. In a divorce, the court will divide a married couple's money and property. Each state has different rules for this division.

For example, in community property states, like California or Texas, the law requires an even split of assets upon divorce. This includes any assets that you had before the marriage that you blended, such as transferring your individual checking account balance to a joint account and any assets you acquired together during your marriage. If you had property before the marriage and keep that asset separate without commingling it, then the court will not divide that asset in your divorce.

Other states are equitable distribution states. In these states, the law requires that the court divide up assets equitably, or fairly. So, depending on the state's laws and your situation, the court may not award a 50-50 split of all assets. For example, the court will examine your employability and the length of your marriage.

A court considers your assets not just for property division, but also as a basis for alimony or child support. That's why one spouse may want to hide assets—so they can pay a lesser amount in either spousal or child support.

How to uncover potential hidden assets

If you think your spouse is hiding assets, you have a couple of options. In contested divorce proceedings, discovery must occur. In discovery, both spouses produce requested documents to their lawyers and potentially to the court. For example, you'll provide your pay stubs, bank statements, retirement plan statements, the deed for your home, information on your cars, and information on your debts, among other documents. Through discovery, your attorney may locate certain assets that your spouse attempted to hide.

Further, if your spouse doesn't produce certain documents during discovery, you can subpoena them for those documents. Your spouse must provide the requested documents under subpoena or face penalties from the judge.

Additionally, your attorney may depose your spouse, meaning your spouse must answer questions under oath. If your spouse lies about specific assets, then they can face penalties. Your spouse also may be called to testify in court, which is also under oath. If the judge orders your spouse to produce documentation on specific assets, and your spouse does not, then the judge could issue fines or jail time for failing to comply with the court order.

Finally, if none of the above uncover suspected hidden assets, you can employ an investigator to follow your spouse. The investigator may determine where or how your spouse is hiding assets.

If you're going through a divorce and you suspect that your spouse is hiding assets, you may consider hiring an experienced family law attorney to help you uncover these assets. Since divorce proceedings can be complex, it's best to team up with someone who's on your side.