When a couple is going through a divorce, the level of trust they have in each other might well be at a serious low point. A consequence of that loss of trust is that couples may seek to hide assets—or suspect the other spouse of doing so—for the purposes of manipulating the property division in their favor.
Hiding assets in a Texas divorce is a serious offense, which can result in everything from unfavorable settlement terms to criminal charges. Spouses who suspect this is happening to them may need an attorney experienced in complex, high-asset divorces, to uncover what is going on.
Ways Assets Are Hidden in a Divorce
There are a wide range of methods spouses may use to conceal assets from each other, from those that are extremely complicated and involve foreign jurisdictions to others that are simple and involve leaving assets “hiding in plain sight”, as it were. Here are just a few of the tactics that a spouse may try, and that an experienced lawyer can look for…
Moving Money Into Foreign Accounts
If a couple has a large stock portfolio, a spouse might set up an account in another country. There are some nations—notably Switzerland—where the identify of an account holder cannot be disclosed without that person’s permission. Situations like this might arise when one spouse took primary responsibility for managing the accounts and the portfolio is large enough that they believe the other spouse will not be aware of the missing funds when it’s time to make financial disclosure statements in a divorce.
Opening New Bank Accounts
It might not take something as dramatic as a Swiss bank account to hide the money. A spouse might simply open up a new savings account right here in Dallas or somewhere nearby. Now, to do it in their own name would make it easy enough to track. But what if they got a sympathetic family member or a trusted friend to open the account and then moved money there? Another possibility, albeit more complex, is using the Social Security numbers of children to create a new bank account .
A similar method might be a spouse suddenly claiming to owe money to a friend or family member they know they can trust. It’s a very simple tactic that has friends or family hold the money in their own name, and then return it to the spouse after the divorce.
Possible warning signs of for any of these asset-hiding strategies can include the spouse getting a new P.O. Box, exclusively in their own name, to hide the new financial statements they’ll be receiving. Unexplained cash withdrawals can be a major red flag. If a spouse is able to direct their paycheck to different bank accounts via direct deposit, then smaller income is certainly something to look into.
There are also strategies that might not seem like asset hiding per se, but they are asset devaluation—and in the eyes of the state of Texas, that amounts to the same offense, if done deliberately to deceive a spouse. These include the following…
Do you own expensive antiques or other heirlooms? A spouse may hire an appraiser that will value these items at less than they are truly worth (or more if that’s the misrepresentation that will serve the spouse’s financial interest). If a spouse owns a business, that will need to be valued, and it can be similarly low-balled for the sake of impacting the settlement. The value of real estate may also be subject to deliberately wrong appraisals
Manipulating the Business
A spouse whose income derives from their business has a number of ways they can create the illusion their enterprise is worth less than it actually is. One way might be to tell customers to delay paying on invoices, thereby reducing cash flow. Or the business owner could show a sudden interest in the “long game”, making big outlays in investments that reduce a business’s short-term profits, but enhance its long-term potential—after the divorce has been finalized.
Altering Investment Strategies
The stock portfolio can be similarly tampered with. Does a spouse who never showed any interest in “buying the dip”, suddenly want to go all-in on stocks that are declining? It may well be a good idea. It’s also true that the short-term value of the portfolio will be less, and any enhancements to the long-term value will come post-divorce settlement.
How to Fight Back
The good news is this—a divorce lawyer who is experienced with high-asset cases and is diligent in their investigation, can work to ferret out these tactics and protect their client’s best interests in the settlement. A spouse might get a settlement assuring them of a share in future profits of the business or the later growth of the stock portfolio.
Furthermore, Texas state law is unequivocally on the side of the spouse being victimized by any obvious attempt at asset hiding. Texas law considers the hiding of assets to be a “fraud on the community”. In the short-term, a family law judge may choose to award all of the hidden assets to the victimized spouse. The devious actions of one spouse will also not look good when it comes time for a judge to make discretionary decisions on issues like child custody.
The consequences of asset-hiding may not stop after the divorce settlement is over. Each spouse makes their declaration of financial assets under oath. That means deliberately false statements are perjury. A District Attorney could choose to bring criminal charges. These false statements are also considered contempt of court, which has more negative ramifications.
O’Neil Wysocki P.C. has a deep and talented team of lawyers, who understand the detail-oriented work that’s necessary in managing a divorce settlement with complex assets. Call today at (972) 852-8000 or contact us online to set up a consultation.