What Are the Implications of Hidden Assets in San Diego Divorce Cases?

Can Someone Legally Hide Assets from the Court During Divorce Proceedings in San Diego?

Family law in California prohibits hiding assets during divorce proceedings, and the court takes these kinds of actions very seriously. Both spouses are required to produce disclosures of all income, debts, assets, and expenses. They must also provide tax returns for at least the previous two years.

The consequences of hiding assets are significant.

The spouse who hid the assets could lose 50% or more of the value of the hidden assets.

They could also be required to pay the attorney’s fees and other expenses the other spouse incurred while searching for the hidden assets.

If the hidden assets are sizable enough, the spouse could be charged with breach of fiduciary duty. That could lead to the other spouse being awarded damages above and beyond the value of the hidden assets, legal fees, and expenses.

Are There Any Assets That Aren’t Subject to Asset Division in California Divorce?

There may be. California is a community property state, meaning that any property belonging to the marriage should be divided as evenly as possible. However, some assets may belong to one spouse only (known as separate property), and those aren’t divided in the divorce. These are just a few examples.

Inheritances or gifts. If one spouse receives an inheritance or gift in their name only and doesn’t use it for the benefit of the other spouse, they may be considered separate property. For example, if one spouse receives a cash inheritance in their name, puts it into a financial account that they solely own, and doesn’t use the funds for things like mortgage payments or joint vacations, that may not be subject to division.

Separate property from before the marriage. If one spouse had assets that they solely owned before the marriage and that were never used within the marriage, they may qualify as not being part of the division.

Prenuptial agreement. Property can be specified as separate, not community, in a prenup.

Transmutation agreement. This is a legal document the spouses can sign agreeing that certain community property items should be regarded as separate property for one spouse.

Regardless of which of these may apply to your situation, it’s crucial to understand that these are all complex legal equations. Adding suspicion of hidden assets to them makes them even more complicated. That’s one reason it’s vital to work with an experienced divorce attorney who understands the nuances of California divorce law.

How Do People Hide Assets in Divorce Proceedings?

Unfortunately, there are many ways people can try to hide assets during a divorce. This is by no means an exhaustive list. If you’re concerned that your spouse is trying to hide assets and the technique isn’t listed here, you should still contact an attorney experienced in working with hidden assets cases.

Cash transactions. This can involve a number of tactics, including a fake loan to a close friend or family member that will be repaid when the divorce is final.

Business transactions. This may involve a spouse hiding money within the business they own, or if they’re an employee, asking the employer to withhold bonuses or pay raises until the divorce is final. The spouse may also try to underreport their income, especially if some or all of their income comes in cash.

Offshore accounts. One spouse may store assets in foreign accounts that aren’t subject to U.S. laws.

Gifts. One spouse may give gifts to family and friends that eventually make their way back to that spouse.

Undervaluing physical property. This happens when one spouse uses cash to purchase something like artwork or jewelry and lists its value as much lower than its actual worth in their financial disclosures. They can then sell the item after the divorce and retain the profits.

What Are Some Ways Hidden Assets Can Be Uncovered?

There are many ways, but keep in mind there may be some legal pitfalls. It’s best to search for evidence with the help of an experienced attorney. The attorney may recommend hiring an auditor experienced in uncovering proof of hidden assets.

Records and statements. The spouse must provide tax records and financial statements. Sometimes hidden assets can be identified in these, or an auditor can detect a pattern that indicates activity that’s worth extra scrutiny and investigation. The same applies to business records, whether the suspect is an employee, investor, or owner.

Tax assessor. Sometimes, a spouse withholds information about property they own, but it might be found in tax assessor records.

Subpoenas. Friends, family members, and business associates who may be involved in hiding cash or other assets can be subpoenaed and forced to provide documents.

What Should I Do if I Think My Spouse Is Hiding Assets During Our Divorce?

Call The Law Office of George Gedulin as soon as possible at 858-943-6591 to request a free case analysis. Divorce has been identified as one of life’s most stressful events. It can become even more traumatic if it appears one spouse is trying to hide assets from the other. Our team of experienced, knowledgeable divorce attorneys understands what’s at stake. We can review the specifics of your case and the possible hidden assets to advise you on an approach to move forward toward the best possible outcomes.