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TX high asset divorceWhen it comes to a high asset divorce in Texas, both parties need to take care when selling or disposing of anything that might be considered marital property. In other words, do not sell all of your jewelry or expensive electronics and keep the money hidden from your estranged spouse. If you do this, a court may consider such actions “fraudulent” and penalize you when making a final division of the marital estate.

Judge Orders Ex-Wife to Repay Ex-Husband for “Constructive Fraud”

Now, selling assets that partially belong to you may not be fraudulent in the traditional sense of that word. But Texas law does consider it a “fraud on the community.” This is another way of saying one spouse breached their fiduciary duty to the other spouse.

Here is a real-world illustration of what we are talking about. In a recent Texas divorce case, a husband filed for divorce against his wife after eight years of marriage. The couple had no children. In his divorce petition, the husband alleged his wife had sold more than $50,000 worth of “household goods, furniture, and electronics” acquired during the marriage without his consent. Basically, the husband said he returned home one day to find his house “empty.” The house itself was the husband's separate property – he acquired it before the marriage – but everything else was considered community property.

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TX high asset divorce attorneyOne of the factors that sets high asset divorces apart from many other divorces is the practice of hiding assets. Fortunately, there are steps that divorcing parties can take to discover and report attempts by their spouses to hide assets. However, taking these steps usually requires the assistance of professionals, including a forensic accountant and a high asset divorce attorney, both of whom can help track down assets and thereby ensure that any settlement agreements entered into by the parties account for all of the couple’s property.

Utilizing the Discovery Process

Couples who litigate their divorces are required to provide each other with copies of important documentation and to submit to questioning. By requesting the production of documents and issuing interrogatories, a high asset divorce lawyer can help get to the bottom of a couple’s financial situation, as parties who refuse to produce documentation as ordered, or who lie while under oath, face strict penalties.

Following Paper Trails

Divorcing spouses attempt to hide assets in a number of different ways, including:

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TX divorce lawyerCryptocurrency, or virtual currency, has existed in one form or another since 2009, but has become a much more mainstream investment over the last few years. While it is true that investing in cryptocurrency can be a lucrative endeavor, it can also make for a difficult and lengthy property division process for couples who later decide to divorce. For instance, it is becoming increasingly common for one spouse to use cryptocurrency as a means of hiding assets from the other during the divorce process.

Fortunately, there are ways to prevent this type of behavior, which is unlawful under Texas law, so if you and your spouse have decided to file for divorce and you have questions or concerns about how your marital assets will be divided, you should strongly consider contacting an experienced high asset divorce lawyer who can ensure that you reach a fair and equitable settlement.

Tracing Cryptocurrency

As stated earlier, cryptocurrency is virtual currency that exists only online and is traced on an encrypted ledger that details all transactions. Unfortunately, it is the very nature of cryptocurrency that makes it an ideal means of hiding assets, as it tends to be difficult to trace and hard to value. Divorcing spouses are required to disclose all of their assets and liabilities at the outset of proceedings and while many are forthright in these disclosures, some are not so scrupulous. Cryptocurrency is the perfect vehicle for many of those who fall under the latter category.

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TX divorce lawyerFinance-related issues are often the biggest source of conflict amongst divorcing couples, something that is especially true for couples with a high net worth who own unique, significant, rare, or particularly valuable assets. In these cases, conflicts can quickly escalate, derailing negotiations and resulting in months or even years of litigation. Fortunately, high asset divorces don’t have to be accompanied by conflict and disagreement, as there are a number of important steps that couples can take to help their divorce move towards amicable relations and a secure financial future for both parties. For help ensuring that your own divorce goes as smoothly as possible, it is critical to speak with an experienced high asset divorce lawyer who can advise and assist you.

Obtaining a Clear Picture of Your Asset Portfolio

While many married couples have an equal say in financial decision making, it is also not uncommon for one spouse to be more involved in overseeing the family’s financial holdings than the other. Unfortunately, this can leave the non-involved spouse at a disadvantage if a couple later decides to obtain a divorce. For this reason, spouses who are considering filing for divorce are strongly encouraged to begin taking steps now to document their financial situation by collecting copies of bank statements, loan documents, tax returns, invoices, and receipts.

Hiring a financial expert can be crucial to the success of this endeavor, as can retaining an experienced family law attorney who can ensure that the parties receive equitable treatment during the property division process.

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TX divorce lawyerAll divorce proceedings are complex and potentially emotional for the parties involved. High asset divorces, however, tend to come with their own set of unique issues. For instance, hiding assets is much more common in divorces where one or both spouses have significant, unique, diverse, or particularly valuable assets. Fortunately, there are steps that divorcing parties can take to ensure that their spouses are not attempting to hide assets, so if you and your spouse have decided to file for divorce and you are concerned that he or she may be attempting to hide or waste assets, it is critical to speak with an experienced high asset divorce attorney who can explain these steps to you and ensure that your property is protected.

Most Common Methods of Hiding Assets During Divorce

Unfortunately, it is not uncommon for one spouse to try and hide assets from the other during divorce by utilizing one or more of the following methods:

  • Transferring marital assets out of a joint account into a newly created or already existing account that is only in one spouse’s name;
  • Transferring cash or investments to a friend or relative’s account until the divorce is finalized;
  • Purposely overpaying the IRS and instructing the agency to use the current year’s refund for next year’s taxes;
  • Taking cash withdrawals on debit cards;
  • Delaying any promotions, raises, or bonuses until after the divorce is finalized;
  • Delaying receipt of commission payments; and
  • Purposely failing to report employer retirement accounts or stock options to the financial analyst.

Couples who own an interest in a business have even more options when it comes to hiding assets, including:

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TX divorce lawyerMany couples who decide to file for divorce are willing to communicate openly and honestly about their assets in an effort to ensure that their divorce is resolved as smoothly and as amicably as possible. Unfortunately, this is not always the case, especially in high asset divorces when valuable property is at stake. In these cases, it is not uncommon for one spouse to try and hide assets from the other in an effort to avoid reaching a fair property settlement. If you believe that your spouse is hiding assets in order to avoid dividing them equitably upon divorce, you should speak with an experienced high asset divorce attorney who can help you determine your next steps.

Why Hiding Assets Is Problematic

Texas is a community property state, which means that most family law courts divide marital assets owned by a divorcing couple fairly and equally upon dissolution of the marriage. Hiding assets makes this endeavor nearly impossible and could leave one spouse struggling financially after the divorce is finalized. Unfortunately, this type of conduct is particularly common in high asset divorce cases, where one spouse wants to keep a unique or valuable asset to him or herself.

What Are the Penalties for Hiding Assets in Texas?

Because hiding assets is so detrimental to the process of creating a fair property settlement, Texas courts impose severe penalties on those who attempt to defraud their spouses in this way. For instance, a divorce judge who is confronted with evidence of concealed assets could order the at-fault party to give up the asset to the other spouse or could award a greater share of the community assets to the innocent party. Parties who choose to hide assets during divorce could even face charges from the IRS if those actions had tax implications.

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TX divorce lawyerDuring a divorce, spouses are required to disclose detailed information about their income, assets, and debts. This ensures that both parties are able to make informed decisions during the property division process and that any settlement or court order incorporates accurate information about all known financial factors. While many divorcing spouses are careful to provide accurate and detailed financial records to each other, it is also not uncommon for one spouse to attempt to lie about assets or debts in an effort to retain the entire interest in an asset or to force a spouse to pay more than his or her fair share of a debt. This type of conduct is strictly prohibited under state law, so if you believe that your spouse is attempting to hide assets or liabilities, it is important to contact an experienced high asset divorce attorney who can ensure that your interests are protected.

Improper Disclosures

Disclosing all of one’s assets, interests, and liabilities is a complicated process, so there are actually a number of ways that a spouse can avoid telling the truth about his or her financial situation. In many cases, this involves failing to list certain assets on necessary disclosure forms or assigning improper values to property or debts. Alternatively, a party could fail to come clean about when and how he or she acquired an asset or could hide documentation that would reveal the truth about property values or ownership. In other cases, one spouse misrepresents how much the other contributes to the household, lies about how joint funds are used, or even unfairly accuses the other of stealing funds. In either case, this kind of behavior is unlawful in Texas, so spouses that are discovered violating disclosure rules could be held in contempt of court, or lose their interest in certain property.

Document Review

One of the best ways to find out whether a spouse is hiding or lying about his or her assets or debts is to compare the information that he or she provides with financial records, such as:

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TX high asset divorce lawyerIn Texas, assets acquired during a marriage are subject to equitable division upon divorce. Whether a couple is able to reach a divorce settlement on their own in an out-of-court setting, or a court orders property division after the parties’ litigate the issue, a divorce will only be officially granted when an arrangement has been reached. In most divorce cases, all property-related issues are resolved by the time the court issues a divorce decree. However, it is also not uncommon for one party to discover, after a divorce has already been finalized, that his or her former spouse was hiding assets in an effort to retain sole possession. Concealing assets during divorce is unlawful, so parties who determine that they were unfairly denied an equitable portion of a specific asset can ask the court to step in and distribute the previously undivided property. This can be a difficult endeavor, so if you recently discovered that your former spouse was hiding assets during your divorce proceedings, it is critical to contact an experienced high asset divorce attorney who can help you collect your rightful share of your marital property.

Dividing Assets

During divorce proceedings, courts require couples to provide evidence of all of their different assets, including titles, deeds, bank statements, and receipts for collectibles like artwork or antiques. Providing this documentation helps give courts a good idea of each party’s financial holdings, which in turn, enables them to fairly and justly divide those assets between the parties. Obviously, a fair distribution of marital assets isn’t possible if one of the parties, or the court, is unaware that certain property exists. For this reason, when a party later learns that a former spouse was concealing assets, courts allow them to file a new lawsuit requesting distribution of the remaining undivided property.

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