Thinking about hiding money during divorce from your spouse? Want to know if a lawyer can help? Disclosing the asset might just be in your better interest.
Hiding Money From My Spouse During Divorce: Can A Lawyer Help?
“I have some cash I don’t want to share with my spouse (that they don’t know about) — can my lawyer help me keep that money from my spouse during our divorce?”
Todd Coulston, a family lawyer in Irvine, answers:
When people marry each other, they enter into a fiduciary relationship with each other which involves, among other things, duties of good faith, fair dealing, and accounting to the other spouse for the receipt and use of marital income, expenses, assets, and obligations. Upon separation, these fiduciary duties become more heightened in the context of divorce where many jurisdictions require spouses to make a full disclosure and accounting to the other spouse of all assets, debts, income, and expenses including all marital assets as well as all assets which might be considered the separate property of a specific spouse. If a spouse fails to disclose certain assets or funds to the other spouse and, it is subsequently discovered that there has been a failure to disclose, that spouse may suffer significant penalties and/or sanctions from the court as a result.
In addition, to ordering the non-disclosing spouse to reimburse the other spouse for their share of the non-disclosed asset, the court can order the non-disclosing spouse to provide an accounting for the funds and their use of those funds. Additionally, in situations where a court determines that a spouse has intentionally (or even fraudulently) hidden an asset from the other spouse, the penalties can lead an award of 100% of the non-disclosed asset to the other spouse as well as the payment of the other spouse’s attorney’s fees, costs, and the payment of monetary sanctions.
If I have a client who has an asset that they are reluctant to disclose and/or that they are seeking to protect, my advice to them is always to disclose the asset to the other spouse. There are often ways in which a settlement can be crafted to protect that asset for the client and accomplish their goals. It may be that the character of the funds will allow them to maintain the asset as their own separate property anyways. For instance, funds that are inherited or received by gift are typically considered to be the separate property of the receiving spouse even if they are received during the marriage. It is a much better practice to disclose the asset at the outset and then work to protect it for the client. The potential severe penalties and significant additional litigation costs resulting from the future discovery of a non-disclosed asset just aren’t worth the risk of non-disclosure.
To learn more about your assets amidst a divorce, read our article: Are All Assets Equal in Your Divorce?