Discovering or suspecting that your spouse hides assets in divorce can feel like a profound betrayal on top of an already painful experience. In California, both spouses have a legal obligation to be completely honest about their finances, and when one person breaks that trust, the court can impose serious penalties. The law provides powerful tools to uncover the truth and hold the dishonest party accountable, ensuring a fairer outcome for you and your family.
If you are concerned your spouse is hiding assets, a skilled family lawyer can help you understand your rights and the legal processes.
Key Takeaways: What Happens If Your Spouse Hides Assets in a Divorce
- Spouses in California have a legal "fiduciary duty" to one another, requiring complete honesty and full disclosure of all assets and debts during a divorce.
- There are formal legal processes, known as "discovery," designed to uncover financial information a spouse may be attempting to conceal.
- A spouse found to have hidden assets can face significant penalties, including awarding 50% to 100% of the hidden asset's value to the other spouse.
- Common red flags of hidden assets include sudden financial secrecy, large unexplained cash withdrawals, or new P.O. boxes.
- Working with legal and financial professionals, such as forensic accountants, can be instrumental in tracing and documenting concealed funds or property.
Understanding Your Spouse's Legal Duty in California
During a marriage and throughout the divorce process, spouses owe each other what is called a fiduciary duty. Think of this as the highest level of trust and responsibility one person can have toward another regarding finances. Under California Family Code § 721, this means each person must act in the other's best interest and cannot take financial advantage of them.
When you file for divorce, this duty requires both parties to exchange a Preliminary Declaration of Disclosure. This is a sworn statement listing all assets and debts, both separate and community property. Hiding assets is a direct violation of this duty and a form of fraud against both you and the court.
Common Warning Signs of Hidden Assets
Trusting your intuition is important, but concrete signs can help validate your concerns. Some people going through a divorce may notice subtle changes in their spouse's behavior that might indicate they are trying to hide assets.
- Sudden Secrecy: Your spouse suddenly becomes very private about finances, changing passwords on online bank accounts or redirecting financial mail to a new P.O. box.
- Unexplained Withdrawals or Transfers: You notice large sums of money being moved from joint accounts to an unknown account, or your spouse begins making frequent, large cash withdrawals.
- Delaying Divorce Proceedings: A spouse who is hiding assets may try to drag out the divorce process, hoping you’ll give up or that they’ll have more time to move money around.
- Sudden "Gifts" or "Loans": Your spouse claims to have "repaid a loan" to a friend or family member you never knew existed, or gives a valuable piece of art to a relative for "safekeeping."
These actions are often more than just suspicious; they can be calculated attempts to reduce the value of the marital estate you are entitled to share.
How a Family Law Attorney Can Help Uncover Hidden Assets
If you suspect your spouse is hiding assets, you are not powerless. The legal system has a formal process called discovery that allows your attorney to legally demand information and documents from your spouse and third parties.
The Formal Discovery Process for Finding Hidden Assets in Divorce
Discovery is a fact-finding mission to get a complete picture of your community property. It’s not about taking your spouse’s word for it; it’s about getting official proof.
- Form Interrogatories: These are standardized, court-approved questions your spouse must answer under oath about their finances.
- Requests for Production of Documents: Your attorney can demand copies of specific financial records, such as bank statements, credit card bills, tax returns, and business records, for the last several years.
- Depositions: This is a formal, out-of-court interview where your attorney questions your spouse under oath in front of a court reporter. This can be a very effective way to get direct answers and lock in their story.
- Subpoenas: If assets are held by a third party, like a bank, employer, or business partner, your attorney can issue a subpoena, which is a legal order for them to turn over relevant financial records.
This process creates a paper trail that can lead directly to assets your spouse may have tried to conceal.
Working with Financial Professionals
In complex cases, especially those involving a family business, investments, or offshore accounts, an attorney may recommend bringing in a forensic accountant. This is a financial specialist trained to analyze financial records to find inconsistencies and trace where money has gone. They can examine business ledgers, trace cash flow, and value complex assets, providing expert analysis that can be presented as evidence in court.
What Are the Consequences When a Spouse Hides Assets in Divorce?
California courts take financial dishonesty very seriously. The consequences for a spouse who is caught hiding assets are severe and are designed to discourage this behavior.
In California, if a spouse is found to have intentionally hidden an asset, the court can award the other spouse 50% of that asset's value. If the court finds the behavior was done with "malice, oppression, or fraud," the penalty can be even higher—the wronged spouse could receive 100% of the value of the hidden asset.
Beyond losing the asset itself, the dishonest spouse could also be ordered to:
- Pay for the attorney's fees and costs you incurred to find the asset.
- Face a negative adjustment in their spousal support award.
- Suffer damage to their credibility, which can affect the judge’s decisions on other matters in the divorce, like child custody.
These penalties underscore the importance of transparency and are a powerful tool for ensuring a fair and just division of property.
FAQs: What Happens If My Spouse Hides Assets in Divorce?
Here are answers to some common questions about dealing with hidden assets during a divorce.
What if I find out about hidden assets after the divorce is final?
Even after a divorce is finalized, you may still have legal options. You can file a motion with the court to "set aside" the original judgment based on fraud or perjury. There are time limits for doing this, so it is crucial to act quickly once you discover the concealed asset.
Is it illegal to transfer money to a family member before a divorce?
If the transfer is made to hide the money from the marital estate, it is considered a fraudulent conveyance and a breach of fiduciary duty. The court can "claw back" those funds and include them in the property division, and the spouse who made the transfer will face penalties.
How can I protect myself if I suspect my spouse is hiding assets?
Start by gathering any financial documents you have access to, such as old bank statements, tax returns, and loan applications. Document any suspicious behavior or conversations. Most importantly, discuss your concerns with a family law attorney who can advise you on the best steps to take.
Can my spouse be forced to pay my legal fees if they hide assets?
Yes. If the court finds that your spouse acted in bad faith by hiding assets, it can order them to pay for all the legal and professional fees you had to spend to uncover their deception. This is another way the court discourages dishonest behavior.
Fischer & Van Thiel: Trusted Divorce Lawyers
Facing a divorce is hard enough without the added fear that your spouse is being dishonest about your shared finances. You deserve clarity, fairness, and a settlement that allows you to move forward into your next chapter with security. Protecting your rights during this process is not just about money; it’s about ensuring you receive what you are rightfully owed.
The attorneys at Fischer & Van Thiel are committed to providing compassionate guidance and strong advocacy for families in San Marcos, Carlsbad, and across San Diego County. We invite you to schedule a complimentary 30-minute consultation to discuss your situation and learn how we can help protect your interests. Contact us today at (760) 722-7669 or through our online form to get started.