Failing to disclose assets during divorce may be costly

On Behalf of | Sep 2, 2020 | Divorce

Whether out of anxiety over the financial future or bitter feelings against their spouse, individuals facing divorce may find it tempting to try to hide or spend down assets to avoid a court-ordered division of property.

However, if the court discovers non-disclosure of assets during or after the divorce process, it may not only negatively impact a final settlement, it could lead to additional monetary and legal penalties.

What assets must spouses disclose during divorce?

When a divorce goes to court, each side participates in a discovery process during which spouses must disclose all assets, including both community and separate property. In addition to bank accounts, real estate and personal property, assets that the court must review may include retirement accounts, investments, business assets and income, including bonuses, commissions and stock options.

What types of investigation does discovery involve?

If one spouse fails to produce requested documents voluntarily, an opposing attorney may use a subpoena to obtain them. A spouse may also undergo a deposition during which he or she answers specific questions under oath. When a divorce is contentious or involves substantial assets, spouses may employ a forensic accountant or private investigator to uncover potentially undisclosed financial information.

What are the penalties for hiding assets?

In Texas, failing to disclose assets during divorce may constitute fraud on the community.  In addition to awarding a larger portion of the shared estate to the other spouse, the court may force the fraudulent party to pay a monetary penalty. Hiding assets may also impact the court’s decisions regarding support payments and child custody arrangements.