Geographically speaking, Jacksonville, Florida is the largest city in the continental U.S. Size brings with it many advantages – including many places to hide assets. While we won’t suggest that Jacksonville’s size has anything to do with the concealment of marital assets during a divorce, the problem is certainly no less serious in Jacksonville than it is anywhere else.
When it comes to the distribution of marital assets, Florida is an “equitable distribution” state. The basic principles of equitable distribution are: (i) assets are classified as either joint marital assets or individual assets, (ii) marital assets are divided 50/50 as a general rule, and (iii) a court will deviate from the 50/50 rule where fairness and equity demand it.
How Dishonest Spouses Conceal Assets
Remember that your spouse may begin concealing assets in anticipation of divorce. The process might even begin before you anticipate a divorce if your spouse initiated the divorce. Although the concealment of marital assets is a threat, even the concealment of personal assets can swing property distribution in favor of the offending spouse through a bogus plea of poverty.
The following are some of the most common ways spouses hide marital assets.
- Control over information – The offending spouse is in charge of all accounting and financial arrangements.
- Secrecy – Your alarm should be triggered if your spouse’s information security mechanisms rival the CIA’s, especially if even you are not allowed full access.
- Soliciting your signature on legal documents – Read before you sign, even in dealings with your own spouse. And let a lawyer look over the document before you sign it if your suspicions are raised.
- Understating financial resources – This can be detected if the offending spouse maintains a lifestyle that is obviously inconsistent with their financial statements (especially if you maintain separate households).
- Having financial statements sent to a separate mailing address – A secret, privately rented mailbox is a dead giveaway.
- Deleting important computer files – Important files have vanished or the computer mysteriously “crashes” at an opportune time.
- Maintaining offshore bank accounts – This is a particularly telling red flag when it involves jurisdictions that are internationally known for poor banking transparency such as Switzerland, the Cayman Islands, Hong Kong, and Luxembourg. Frequent overseas trips, especially to these destinations, should set off an alarm.
- Telling you financial sob stories – This may be designed to account for missing assets by passing them off as business or investment losses (this is actually a form of money laundering).
- Making large purchases – Either large purchases or withdrawing large amounts from a joint account with no obvious necessity.
- Making large gifts to relatives or close friends immediately before and during divorce proceedings – In all likelihood, equal “gifts” in the opposite direction will be expected as soon as divorce proceedings are finalized.
How to Find Hidden Assets: The Divorce Discovery Process
In order to uncover hidden assets, you need to suspect that they exist and you need to look for them. To find them, you need the right tools. A legal structure known as the discovery process, which is initiated after the filing of a divorce petition, provides you with those tools. These tools can help you even if your spouse managed family finances during your marriage.
The discovery process allows you to demand certain information from your spouse and, in some cases, third parties. Because it’s backed with court authority, if your spouse refuses to cooperate, the court can impose certain penalties. The four most important tools of the discover process are:
- Document demands – You can demand that your spouse (or a third party such as a bank) turn over certain documents.
- Interrogatories – Interrogatories are written questions or requests for admissions that your spouse or a third party must respond to.
- Inspections – You can demand the physical inspection of an asset such as the contents of a bank safe deposit box.
- Depositions – You or your lawyer can question your spouse or a third party under oath.
These tools won’t do you much good, of course, unless you know what to ask for. You will first need to inventory the assets owned by you or your spouse (individually or jointly) to the best of your knowledge. This includes both marital assets and assets that you suspect may not be marital assets. After consulting with your attorney, you may seek information such as:
- Tax returns (both individual and business)
- Loan applications (including all supporting documentation)
- Financial statements
- Account histories (deposits and withdrawals over time) including accounts held in your spouse’s name only
- Wire transfer documents
- Copies of canceled checks
- Information about hidden accounts (by sending requests to banks where you think your spouse may have a secret account)
- Other sources suggested by your attorney
Gathering information from these sources can lead you to further clues. Large withdrawals or transfers from a hidden bank account, for example, might lead you to other assets.
Penalties for Hiding Marital Assets
Concealing marital assets in order to gain advantage in a divorce-triggered property division is a serious matter that can result in severe penalties for the offending spouse. If a spouse is caught concealing or attempting to conceal marital assets, the court may:
- Assess court costs against the offending spouse
- Assess investigator fees against the offending spouse, if the other spouse was forced to hire an investigation to discover the concealment
- Void any prenuptial or postnuptial agreements
- Hold the offending spouse in contempt of court if they refused to comply with a court order to divulge marital assets
- Charge your spouse with perjury if he or she lied under oath
What Are My Options If I Don’t Discover the Fraud until after the Divorce Is Finalized?
You might discover that your spouse concealed marital assets after a divorce settlement has been finalized. In this case, keep in mind that any settlement agreement will include an assets disclosure clause. If your spouse failed to fully disclose marital assets, you can sue your spouse for damages based on breach of the divorce settlement agreement.
There’s No Time to Lose
Contact the family law attorneys at Beller & Bustamante, either online or by telephone at (904) 288-4414, for a no-obligation consultation where we can answer your questions and discuss your options.We serve clients throughout Greater Jacksonville including Northside, Westside, Southside, Arlington, the Jacksonville Beaches, and more.