What to Know About Hidden Assets in a Divorce

In a South Carolina divorce, marital assets are supposed to be divided equitably. But how can the court ensure a fair division of assets if your spouse is disguising their true net worth?

Hidden assets are a common concern for divorcing couples. When one spouse tries to hide assets, they are essentially stealing from the other spouse. By understanding common techniques for hiding assets in a divorce and the legal tools available for finding hidden assets after divorce, you can protect yourself, your rights, and your future.

What Are Hidden Assets?

“Hidden assets” refer to financial resources that are intentionally concealed to avoid equitable distribution in a divorce. They may include undisclosed bank accounts, falsified business records, or property under someone else’s name. The goal of hiding assets in a divorce is to retain more wealth after the divorce, but these actions undermine the fairness of equitable distribution. To achieve a fair divorce settlement, full financial disclosure is required.

Examples of Hidden Assets

While there are countless ways an individual can try to hide assets during a divorce, one of the more common is through their business, if they own or operate one. By not accurately reporting revenue or expenses, they can manipulate the balance sheet to report less than what they are actually earning through the business.

For example, a spouse may show overpayments on expenses so operating income is lower, or they may place personal assets in the name of the business to attempt to keep them from being used to calculate marital property.

Another way an individual may try to hide assets during a divorce is by creating a trust and funding it with marital assets, thereby removing the asset from their personal estate. However, assets in a trust are easily discoverable, and a court can determine whether the assets placed in trust were earned during the marriage and are subject to equitable distribution.

How Can Hidden Assets Affect My Divorce?

Hiding assets during a divorce distorts the couple’s financial picture when presented to the court, potentially placing the other spouse at a disadvantage. By hiding assets, the pool of property being divided is smaller than it should be, meaning the honest spouse receives less than their equitable share. This creates an unfair distribution of assets that can jeopardize the divorcing couple’s financial stability.

Hiding assets during a divorce undermines the principles of equitable distribution. Equitable distribution does not mean a 50/50 split; instead, it means the court makes a fair distribution of assets based on factors like the length of the marriage, each spouse’s financial circumstances and contributions to the marriage, and future earning capacity. When assets are hidden, the court’s analysis of these factors is skewed.

Hidden assets in a divorce can also affect alimony and child support obligations, leaving the supported spouse and children with inadequate financial resources when those calculations are based on falsely reported earnings or financial resources.

What Are the Legal Consequences of Hiding Assets?

Courts take asset concealment seriously. If the court discovers one spouse is hiding assets during the divorce process, the judge may impose sanctions or require that the offending spouse pay the other spouse’s legal expenses for the investigation or even receive a smaller share of the marital property as punishment.

If hidden assets are discovered after divorce, the case can be reopened and support obligations or asset distribution may be modified.

How Can I Determine If My Spouse Is Hiding Assets?

It is not uncommon to lose trust in your spouse during the divorce process. In some cases, this may have been part of the decision to seek divorce in the first place. To determine whether your spouse is hiding assets, be alert for the following signs:

• Is your spouse claiming to have borrowed money from a friend or family member?
• Have you noticed a decrease in mail you are receiving—specifically statements from banks, retirement accounts, and other financial institutions?
• Is your spouse making large cash withdrawals without explanation or purchasing expensive items that could be sold later?
• Are they overpaying creditors or paying taxes in advance, expecting refunds later?
• Did your spouse’s business experience a sudden financial loss?

What To Do If You Suspect Your Spouse Is Hiding Assets

If you suspect your spouse is hiding assets:

• Gather and thoroughly review financial statements, looking for unusual withdrawals, transfers to unknown accounts, checks written to cash, or income that does not match your understanding of your financial picture.
• Consider your spouse’s lifestyle, such as vacations, purchases, and entertainment expenses, and document discrepancies between how money is being spent and what financial records show.
• If your spouse owns or manages a business, examine business records carefully, looking for delayed contracts, fake employees, inflated expenses, skimmed cash, or underreported revenue.
• Check for offshore or cryptocurrency accounts.
• Investigate real estate holdings for property purchased in the name of a relative or through a trust or LLC.

In some cases, hiring a forensic accountant may be necessary. A forensic accountant can perform an in-depth financial analysis to identify discrepancies, track unusual transactions, and identify attempts at asset concealment. Their findings can provide valuable evidence that can affect legal proceedings and court decisions.

Seek Help from a Hidden Assets Divorce Lawyer

Brinkley Law Firm, LLC, assists clients across South Carolina in protecting their family, future, and financial stability during and after a divorce. Contact Brinkley Law Firm today to schedule a consultation to discuss your situation and how we can assist you.