Understand the Penalty for Hiding Assets During a Divorce
You feel angry. Betrayed. Frustrated and furious.
Divorce rarely brings out the best in us and oftentimes reveals our inner monsters. This is especially true if abuse and/or infidelity are part of the equation. Nonetheless, you may be obligated to hand over a significant amount of your assets to your spouse as part of your divorce settlement, especially if you earned more than him or put more into a retirement plan and savings while he was spending.
If you happen to live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and possibly Alaska), you will actually have to split all of your martial property (generally everything you earned and purchased during your marriage) in half with your partner. If you feel like your spouse doesn’t deserve a single penny of your money, the temptation to hide assets may be compelling.
Don’t Hide Your Assets No Matter How Much You Want to!
At the beginning of the divorce proceedings, both sides will engage in a “discovery” phase, where they gather information about the finances and assets of the other. During this stage, you will be expected to turn over all of the relevant financial information your spouse and his legal team requests, including income statements, bank statements, investment statements, lists of property, etc. You may also be deposed and expected to answer questions about your assets and finances under oath.
If you lie during your deposition or on the stand under oath, you will be committing perjury, which could lead to significant fines, probation, or even jail time if you are caught! Refusing to provide requested information about your finances and assets can result in a court order to do so. If you refuse the court order, a judge can hold you in contempt of court, which can…you guessed it – lead to fines and jail time.
You May Not Be as Smart as You Think!
Of course, you can only be charged with perjury or contempt of court if you get caught lying or withholding information. You may believe that you can successfully hide assets from your spouse.
Think again! There are many ways to catch you in a lie. For instance, if you underreport your income, your spouse’s legal team can simply ask your employer for their records. Additionally, if your spouse suspects that you are hiding assets, his legal team may hire a private investigator who specializes in sniffing out hidden assets. Finally, if your spouse is the one who initiated the divorce, he might have been planning the move for months or even years and might have gathered financial statements or documented assets long before you have a chance to hide them.
At the end of the day, sticking it to your ex is not worth jail time, and hiding assets won’t make much sense if you have to pay huge fines as a result of a perjury conviction. As much as it may hurt your ego and your pocketbook, the best thing you can do is report your estate faithfully, get through the settlement, and move on. If you plan to get married again, a strong prenuptial agreement can help you protect your assets and give you greater peace of mind!
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