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Hiding the ball: concealing assets during the divorce process

On Behalf of | Nov 4, 2020 | Property Division

So your marriage didn’t work out.

That hardly renders you atypical or some sort of statistical anomaly. Legions of couples in Texas and across the country routinely untie the marital knot. Despite best intentions and ardent hopes of forging a lasting union, many spouses ultimately divorce, and for myriad reasons.

That customarily breeds some challenges, of course, but it also opens the door for a revitalized life marked by new opportunities.

First, though, a prerequisite to stepping through that post-dissolution entryway awaits and requires some formal action. Namely, that is the divorce process. Marital dissolution usually has a few hoops and hurdles to contend with.

A top-tier “we need to finalize this” consideration for many impending exes relates to children. Divorcing moms and dads must duly focus on matters related to custody/visitation, parenting plans, support and additional concerns.

Aside from the kids, due focus often centers – and understandably so — on property division.

Texas’ divorce-linked asset distribution scheme

Although divorce property division is a topic exhaustively addressed and often couched in complexity in law schools and in the legal community, its bottom line can actually be quickly and simply sketched.

In a nutshell, there are two basic modes for dividing marital property. Most states employ an “equitable division” scheme that stresses a fair – not necessarily equal – division between divorcing spouses.

A minority of states, including Texas, feature a so-called “community property” model. That scheme assumes an equal division of most property, with assets denoted as the separate property of one partner being exempt from distribution.

The bottom line in either case is that marital property must be fully identified and valued before it can be divided.

What happens when spousal behavior complicates the process?

Not playing fair: when a divorcing spouse hides assets

The motivation for a spouse to hide wealth during the divorce process is obvious and marked by an arguably childlike mentality that underscores this mindset: I want more, and I want you to have less.

That thought process might be understandable in some divorces, but the urge to act upon it through deceitful means is starkly inadvisable.

Courts frown when presented with evidence of a spouse’s unethical conduct during divorce. And they will unquestionably swing a heavy hammer in instances where that behavior is deemed unlawful.

Soon-to-be exes try to hide assets in various ways, including these:

  • Claims spotlighting fictional losses in a family business
  • Trust creation seeking to benefit other parties
  • Gifting and/or making loans to third parties, with repayment expected following divorce
  • Concealing and delaying payment of various company perks, such as bonuses and stock options
  • False entries made on tax returns
  • Maintenance of secret bank accounts

Of course, many additional wealth-hiding strategies can be readily employed by enterprising spouses intent on shielding divisible assets from their divorcing partners.

Impending exes who harbor suspicions concerning spousal financial misconduct might reasonably want to follow through on their instincts. They can do so by timely contacting a proven family law team with a wealth of experience in property division matters.