Identifying Signs of Hidden Assets in Divorce

Identifying, characterizing, and dividing assets fairly is one of the primary goals of divorce proceedings. Notwithstanding, many separating couples do not want to divide their community assets equally. Unfortunately, emotions like greed and anger at the other spouse can lead individuals to attempt to hide assets. Not only is this unfair to the other person, but it is not permitted under the Family Code. 

You have the right to pursue half of all community property as part of the divorce proceedings. Here is what you need to know about California’s rules regarding asset division and how to tell whether your spouse may be hiding assets from you.

Obligation of Full Disclosure During Divorce

California law requires both spouses to provide each other with full financial disclosures when getting divorced. These disclosures are necessary whether a couple settles their divorce out of court or with the help of a judge. Their primary purpose is to ensure that both spouses and, potentially, the judge fully understand the scope of the community estate.

A full financial disclosure should include all assets and debts you own in whole or in part. This includes the property you share with your spouse, other individuals, and your separate property. The disclosure process accomplishes three things:

  • It ensures both you and your spouse are aware of all marital assets.
  • It allows you to name separate property your spouse may or may not know about and explain why it should not be considered marital property.
  • It reduces the likelihood that either party can hide community assets by claiming they are separate.

Exchanging full financial disclosures is one of the first tasks you must complete during your divorce. If you believe your partner may be hiding property, it may be necessary to request additional documents regarding their finances during the discovery process. 

Why Your Spouse’s Hidden Assets Affect You

California is a community property state, meaning the courts must divide couples’ community property equally during a divorce. Couples can use tools like prenuptial to set other terms before their divorce, but not once the dissolution process begins. The court will make decisions regarding the divorce according to the laws and contracts that were in place when the petition for dissolution of marriage was filed.

If there is no premarital agreement in place, both spouses automatically have the right to 50% of the community property. While you can negotiate a division other than 50/50, you also have the right to insist on an equal division.

This is why some individuals choose to hide funds and possessions. They may want to keep full control over assets like retirement funds, bank accounts, and real estate to be financially better off after the divorce is complete. They may also want to hurt or “punish” their partners by depriving them of their rightful property. Unlawfully hiding assets prevents them from being considered when dividing the community estate and may prevent the other person from claiming their fair share of the joint assets. In short, if your spouse is hiding property from you, you cannot accomplish a genuinely equal split of your assets.

Signs Your Spouse Is Hiding Assets 

It is not always easy to determine if someone is attempting to hide assets during a divorce. If you are not normally in charge of financial decisions in your relationship, you may not be aware of all of the property you share with your spouse. However, the following behaviors may suggest that your partner is not being entirely honest in their financial disclosure:

  • Transferring funds out of shared accounts: Removing money from joint bank accounts may be a sign that your partner is trying to reduce the overall assets involved in your divorce. Those funds should still be considered community property, even if they are moved to an independent account or withdrawn entirely.
  • Making sudden or unexpected large purchases: Similarly, making major purchases can be a way of draining financial accounts before or during a divorce. If these purchases are made with community funds, your spouse may be attempting to harm you financially.
  • Delaying or hesitating to submit financial disclosures: A common sign of concealing joint property is hesitating to provide full and complete financial disclosures. This delay is often intended to give more time to conceal assets effectively. 
  • Leaving out possessions you know exist: A financial disclosure must be complete and accurate. If your spouse “forgets” to include items you know exist and should be considered, they may be trying to keep them out of your divorce proceedings.

Prevent Your Spouse From Hiding Assets

If you are concerned your spouse may try to conceal community assets, it is in your best interest to consult with an experienced family law attorney. Your attorney will help you prepare a complete financial disclosure and submit it to your spouse. They will also help you interpret your spouse’s financial disclosure and identify whether they may be concealing property from you. 

At Madigan & Lewis, LLP, we have the skills and experience necessary to help you determine whether your spouse is concealing property. We will advocate for you to ensure you receive a fair settlement under California law. Learn more about how we can help you by scheduling your consultation with our knowledgeable California family law firm today.