Hiding assets during a divorce proceeding is a common practice among many divorcing people. This is most likely true for many people going through high asset divorces in Minnesota as well as in other parts of the country. In the U.S., about 31 percent of estranged spouses with combined assets lie about their assets during divorce. In a high net worth divorce, the divorcing spouses often use various tricks to hide assets from one another.
This is illegal and unethical. One case highlights the consequences of this in high asset divorce. In this case, the wife hid a lottery award of $1.3 million during the divorce process. The court determined that the wife was fraudulent and ordered her to give the entire $1.3 million to her ex-husband. Based on state community property laws where the couple lived, if the wife had disclosed the lottery winning during the divorce proceeding, she would have been able to keep half of it.
In another case, the husband’s assets were discovered after the divorce was finalized. The court reviewed its previous order and awarded the wife the whole asset. Both show examples of courts in different states creating a penalty for dishonesty and fraud in the divorce process.
Under the Rules of Civil Procedure, when a person signs a financial affidavit, it is presumed that he or she has disclosed all of his or her assets honestly. Lying about assets is perjury. If the court discovers that a person has lied under oath, that seriously harms the person’s credibility, and he or she may face serious consequences. The court may force a person to pay all legal fees and expenses involved in the divorce proceedings and may also order to individual to forfeit the disputed asset.
It is a wise idea to consult with a professional, such as an attorney, during a divorce. The professional’s knowledge and support can help the person going through the divorce to follow the process legally and appropriately. A professional can prepare a lifestyle analysis, which will help in calculating the daily expenses and spending habits during the last three to five years of the marriage. This analysis will help the judge to verify the income and expense statements submitted by the parties to the divorce.
Source: Forbes, “What Are the Consequences Of Hiding Assets During Divorce?” Jeff Landers, Nov. 14, 2012