Uncovering Financial Backgrounds in a Divorce

Concealing assets during a divorce is more common than you think. There are many reasons why one spouse may decide to hide assets from the court. Usually, though, concealing assets is done because a spouse sees it as a way to get back at the other, or because they feel they deserve the full value.

Because property distribution is dependent on factors like the length of the marriage and the earning potential of each spouse, there is a greater chance that one spouse will get less than the other during the divorce settlement. This may also entice someone to conceal his or her financial background.

There are many ways someone can go about hiding assets during a divorce. Common methods include:

• Transferring Assets: This can be done by transferring assets to a new account or asking friends or family to hold on to the asset until the divorce is finalized.
• Cash Withdrawals: Without being suspicious, a spouse can make cash withdraws over time and keep the cash in a secure place. Hiding assets this way can take a long time, but it is still considered fraudulent.
• Underreporting or Overpaying Taxes: By underreporting income on tax returns or financial statements, the total amount will not be analyzed. By overpaying, your spouse can receive the refund after the divorce is final.
• Delay Commissions, Contracts or Defer Salary: By deferring a salary or delaying a new contract or commissions, the monetary amount will not be on the books during the proceedings. 

These are just a few examples of how someone could conceal their assets during a divorce. To ensure that your spouse discloses all of their assets during the divorce proceedings, you should contact an attorney.

You are no entirely helpless if you believe your spouse is concealing financial information. For starters, the first step you can take is to contact an attorney. They can advise you on the best course of action for uncovering hidden assets.

An attorney will make use of the discovery process. During this process, an attorney can ask your spouse for documents and information that relates to the undisclosed assets, incomes, debts and liabilities. Some of these documents can include:

• Receipts
• Deeds
• Title records
• W-2 forms
• Account records
• Royalty agreements
• Stock certificates.

During the discovery process, an attorney can also submit written questions to your spouse, inspect property like wine collections and safety deposit boxes and have the spouse testify under oath.

Having someone testify under oath, also known as a deposition, is an excellent way to get information from the uncooperative spouse. If the spouse is caught lying under oath, they could be charged with perjury.

Hiding assets may not seem like a big deal. But if you are caught, you could face penalties under section 3505 of the Pennsylvania Statute. This section of the law requires both parties in a divorce to submit to the court a complete inventory and appraisement of all marital and non-marital property and their liabilities.

A spouse that fails to disclose a complete list of assets will be penalized. For starters, lying about one’s financial background give the impression that you cannot be trusted. As a result, you will likely receive a smaller portion of the property settlement. 

If it’s discovered that you or your spouse did not disclose an asset or assets with a market value of $1,000 or more, the opposing party has the right to petition the court to create a constructive trust will all undisclosed assets. This trust can then be used to benefit the spouse affected by the nondisclosure and their children if any.

If you or your spouse testified under oath about the whereabouts of assets and it’s discovered that you lied, you could be charged with perjury. Perjury is penalized under section 4904 of the PS with a fine of at least $1,000.