Finances are one of the most common sources of conflict between married partners. When a relationship has deteriorated to the point of divorce, feelings of mistrust, resentment and anxiety about the future may lead either spouse to make emotional decisions that can have a costly impact on the outcome in court.
Attempting to hide or spend down shared assets is one of the most common financial mistakes that separating couples make. It is important that divorcing partners know that doing so may violate Virginia law, which obligates both spouses to make an honest and complete disclosure of all personal and marital property, including income, expenses, debt and other assets.
How do spouses try to hide assets?
From misreporting spending to withholding earnings information, there are many ways that divorcing spouses may try to hide assets from their partner and from court scrutiny. Some of the most common include the following:
- Deferring a bonus, promotion or other salary increase
- Transferring assets to a third party, such as a friend or family member
- Inflating housing, childcare, travel or other expenses
- Making large purchases with cash
- Denying an asset exists or claiming its loss
- Intentionally overpaying taxes
- Retaining assets in a business
- Creating false debt
During divorce proceedings, each spouse participates in a court-sanctioned discovery process in which the parties exchange information, including detailed documentation of financial activities. From bank statements and pay stubs to social media accounts and other electronic data, the discovery process may yield a wealth of information that allows an opposing divorce attorney, forensic accountant or private investigator to uncover hidden or dissipated assets.
What are the penalties for hiding assets?
In Virginia, attempting to suppress financial information or spend down shared assets may result in financial penalties, a division of property more favorable to the other spouse, higher support payments and even imprisonment. A judge may also award court costs and attorney fees to the other party if one partner has attempted to withhold property or income.