In a divorce, spouses often try to improve their individual situation by hiding assets. They believe that if they can keep an asset out of the court’s sight and the court’s reach, they get to keep that asset without having to give the other party an equitable share. When a party tries to move an asset or keep the court and the other party from knowing about it, it’s called a hidden asset.
Hidden assets can be a significant problem in divorce cases that are both large and small. It can frustrate honest litigants, and it can interfere with the court’s ability to award a fair and equitable judgment in a divorce. In many cases, one party may have handled all of the finances during the marriage. The other spouse may not even have a realistic idea of the couple’s true net worth. Fortunately, there are things that you can do to fight back against hidden assets and get the recovery that you deserve.
What the Law Says
Even if an asset it wholly within the other spouse’s name, if either spouse earned it during the marriage, it’s generally marital property. There are a few limited exceptions for assets brought into a marriage that remain untouched during the marriage, assets affected by a prenuptial or postnuptial agreement, and inheritances received by one spouse. However, most property is marital property and subject to honest evaluation and distribution during divorce proceedings.
What Is a Hidden Asset?
Hiding assets may include any of the following:
- Transferring an asset to a friend or family member before divorce proceedings begin
- Transferring an asset to a friend or family member after divorce proceedings begin
- Selling an item for much less than its actual value
- Concealing the fact that you own an item or have an account
- Keeping information about the true value of an item a secret
Using the Powers of Discovery
The Texas Rules of Civil Procedure gives divorcing spouses powerful ways to find hidden assets. You can set out to find evidence of assets that the other side doesn’t want you to find. Taking advantage of these procedures can help you gather evidence of what the other party is trying to hide.
Types of Discovery Requests
Different types of discovery requests include interrogatories, request for production and requests for disclosure. They require the other party to answer questions under oath. If they’re dishonest, the court may hold them accountable. Discovery can be a good way to demand answers to questions about what assets exist and where to find them.
Using Subpoena Power
The subpoena power lets you officially demand records using the power of the court. If the person or business who receives the subpoena doesn’t comply with its demands, they may be found in contempt of court. As a divorcing spouse, your subpoena power isn’t limited to the other party. You might subpoena a bank, a business or even a friend. A subpoena can require the recipient to sit for a deposition or produce records that may be helpful to your case.
If the divorce involves a family business, a business audit can be a good idea. You want to make sure that the divorcing spouse isn’t diverting income. You also want to place an appropriate value on the business for the purposes of the divorce proceeding.
When hidden assets may be an issue, you should pay extra attention to the wording of your divorce judgment. The other side may have to affirm that they’ve provided honest discovery and that they haven’t hidden any assets. If they’re caught hiding assets, the penalties are usually severe. The court may award you the entire asset and impose additional sanctions and penalties on the offending spouse. An experienced divorce attorney can help you obtain what is rightfully yours.
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