Can Money Be Hidden During a Divorce?

In Alabama, marital assets are divided equitably (not equally or 50/50). In order to protect assets or spite their spouse, some people consider hiding an account, emptying their shared bank account, or hiding money and other assets. However, concealing assets has serious legal and financial consequences.

How Do Spouses Hide Money Before or After a Divorce?

During your divorce, both parties will be required to submit a complete and accurate disclosure of economic status, assets, and debts. During this disclosure, either party may try to conceal assets from their spouse and the court by exaggerating their debts or not including certain streams of income within their disclosure. Other ways in which your spouse may attempt to hide assets include (but are not limited to):

  • “Gifting” others with assets or funds
  • Creating false or fake bill statements
  • Deferring income or bonuses
  • Falsifying information about their expenses or asset values
  • Funneling money into accounts opened using your children’s social security information
  • Making excessive, frivolous purchases
  • Putting assets or funds in P.O. boxes
  • Selling assets for under the market value

How to Find Assets Hidden by Your Spouse

If you suspect your spouse of hiding assets, you should try to collect evidence. You can do this by reviewing documents and information you have access to like tax returns, joint bank statement information, pay stubs, etc. If you have some financial documents, you can review:

  • their tax Form 1040 to learn important income data, like their wage, tips vs. salary, pension, etc. as well as retirement plan distributions,
  • Schedule A form as this has itemized deduction that can give you an idea of their real estate and property holdings,
  • Schedule B form as the third section outlines foreign or offshore accounts and trusts your spouse holds,
  • Schedule C form as this outlines their business holding losses and profits,
  • Schedule E form as this includes information on their supplemental income and losses,
  • Loan applications as they often include account records and pay stubs, and
  • Cash flow data as tracing accounts and cash flow can help you uncover hidden assets or recent “gifts” to other people.

You should also tell your attorney that you suspect your spouse has or will hide assets as they can use the discovery process to uncover financial information and assets. During the discovery process, your attorney can acquire information by:

  • Making document demands, which simply means asking the other party to provide you with certain documents like tax returns, loan applications, etc.
  • Asking for a written interrogatory to be completed, which refers to the process of either party answering questions in writing
  • Making inspection demands, which involves asking to be given access to the property (i.e. safe deposit boxes, collections, or other assets) to inspect it
  • Having the other party testify under oath, which involves appearing before a court reporter and answering questions asked by the other party honestly

Retaining the help of a forensic accountant may also be prudent as they are often used in divorce cases to uncover hidden assets. Working with your attorney and using the financial documents provided, they can work to determine whether the information in a financial disclosure is accurate and work to uncover where an asset might have been hidden.

What’s the Penalty for Hiding Assets in Divorce?

Many clients wonder whether it’s illegal to hide money or assets from their spouse, and the answer is yes, it is illegal as hiding assets involves perjury. When you complete your financial disclosure, you are signing the document and asserting that the information included is accurate; if you are asked to testify or complete a written request for admission, you will also be asked to tell the truth under oath. By making false claims or lying under oath, you have committed perjury, which is punishable by imprisonment and hefty fines.

While it is rare that you will face perjury charges for hiding assets, it is very likely you will face the following consequences.

  • You will have to pay for the other party’s legal fees and expenses associated with investigating the hidden assets.
  • Your attorney may resign from the case as you have breached their trust.
  • You also risk losing the trust of the court/judge.
  • You may have to forfeit the value of the hidden asset or the asset itself.

Get Legal Help

If you suspect your spouse will hide or has hidden assets during your divorce, Shaw Family Law is equipped to help you attempt to find the assets and work to ensure your property division settlement is fair. With over three decades of legal experience, our attorney can support you throughout the discovery process and investigation and connect you with helpful experts (i.e. a forensic accountant).

To get started, contact Shaw Family Law by calling (205) 259-7650 today.