Even the most amicable divorces can tempt you to protect yourself financially, and this protection may come in the guise of hiding or diminishing certain assets to retain them for yourself. While understandably tempting, especially if you feel your ex-spouse will make out better than you, in the end, hiding assets in a divorce is illegal and puts you at risk for serious penalties.
If you’re thinking about getting divorced, be prepared to be 100% transparent about all of your personal assets and joint assets acquired since the day you were married. Instead of viewing it through the lens of “how can I get more,” or, “how can I make sure s/he gets less,” consider your assets already legally divided by the state, 50/50, and then list them as thoroughly and accurately as possible.
Hiding Assets Is A Big No-No
Here’s a quick and concise rundown of why you shouldn’t hide assets during your divorce. If you think it’s no big deal, think again. It is.
Hiding assets in a divorce is illegal
There is no state where hiding assets is legal during a divorce. Because California is a community property state, there are very few assets that are not split unless they were yours before you were married or you have a prenuptial agreement in place.
Examples of joint or shared assets include:
- Properties, including rental properties
- Vehicles acquired during the marriage (or that were paid off using joint funds after the marriage)
- Financial accounts of all types, including investments, retirement savings, and pensions
- Any acquisitions worth money that was purchased during the marriage (including jewelry or gifts to one another)
There are exceptions to the community property rule. Examples of those include:
- Properties or vehicles owned prior to the marriage
- Possessions of value owned prior to the marriage
- Family inheritances, even if they were bequeathed during the marriage
- Student loans (those debts travel with the person who took the loan)
Your divorce lawyer will help you determine which assets/debts are held jointly, and which will be retained.
Be 100% transparent with assets and debts
As noted above, the state already considers your jointly-held assets as divided – 50% to you, and 50% to your spouse, once your communal debts have been paid. In the state of California, these assets are listed in two, separate legal forms.
The first form is FL100, which sets up the dissolution of your marriage and asks for a list of properties and assets (including debts) held both individually and jointly. If that form does not allow enough space, you’ll continue on form FL160, specifically designed to declare properties. The detailed forms required for a divorce are complicated and daunting, one of the primary reasons it’s best to work with a legal professional during the process, such as a paralegal, a mediator or a divorce lawyer.
You’ll provide detailed account information, including the name of the account holder (even if it’s one or the other of you), the date the account was opened (or the property was acquired), its value, etc. If any of this information is incorrect, or assets are left out, it’s viewed as an attempt to hide assets, and that comes with a steep penalty.
Once the terms of the divorce are established, assets are distributed by the judge. This distribution happens in completely equal shares, excluding assets that were family inheritances or that were owned/acquired prior to the marriage. If any assets are sold (such as a house, vehicle or toy), the amount leftover after debts are paid off is split evenly between both parties.
Penalty for hiding assets during your divorce
If you or your spouse hide or devalue assets, it will be discovered – either by your lawyer or by your ex-spouse’s lawyer. If something slides past the technological radar, and you make it into court with incorrect documentation, failure to disclose assets and their values can result in legal charges – such as perjury and being in contempt of court.
It also makes judges very unhappy. Since your judge can make virtually any decision s/he wants within the boundaries of California divorce law, your dishonesty or hiding of assets will result in punitive damages. That could involve jail time in extreme cases – especially where the asset hiding was a ploy to reduce child support payments.
You may wind up having to pay your ex-spouses legal fees/charges, and it’s almost certain your ex-spouse will benefit from your dishonesty. Often, this means a larger portion of the assets (or the entire value of hidden assets) being granted to the ex-spouse.
Let Us Help You
Your divorce lawyer will help you remain in your own integrity, ethical and legally sound self as you move through your divorce, so you aren’t tempted. Contact The Law Offices of Gerald Falzone to schedule a free telephone consultation when you need sound advice about divorce or mediation proceedings. We’re here to help you get through it as gracefully and stress-free as possible.