Penalty for Hiding Assets in Divorce: A Legal Perspective

During a divorce, there is a serious matter that often gets overlooked – hiding assets – which carries a hefty penalty. In the throes of separation, some spouses may resort to concealing their wealth. This deceitful practice carries severe consequences for the offending party.

The law doesn’t take kindly to such dishonesty during divorce proceedings. It’s crucial for couples undergoing a split to understand the repercussions of these actions. When it comes down to it, the penalty for hiding assets in divorce is typically far more costly than being upfront about one’s finances from the get-go.

The Reality of Hiding Assets in Divorce

Divorce is a challenging terrain to navigate, and a significant concern amongst parties is the fair division of marital assets. It isn’t uncommon for divorcing spouses to hide assets during this process – this type of financial infidelity is all too common among Americans. According to a recent survey commissioned by Forbes Advisor, 38% of adults lied to a partner about their finances and more than half (54%) felt that lying about finances was equivalent to other types of lying or infidelity.

This type of financial concealment can significantly impact both personal relationships and legal proceedings surrounding the divorce. It can skew property distribution unfairly, and potentially jeopardizes one party’s financial stability post-divorce.

Implications of Financial Infidelity on Divorce Proceedings

Hiding assets introduces complexities into an already emotionally charged situation. The divorce process itself becomes more convoluted and time-consuming due to the additional investigative steps, such as audits, which are required when hidden funds are suspected. If undisclosed monetary resources are discovered, it could lead to penalties up to and including perjury charges depending on state laws.

Beyond the legal implications also lies emotional turmoil and can fuel hostility. Discovering that your partner has been untruthful about the family’s finances throughout the course of the marriage can erode trust and affect co-parenting arrangements once the divorce has been finalized. Hostility between divorcing couples can make resolution harder to achieve overall, and creates a hostile environment for children (if present).

While these factors underscore how damaging acts of deception related to monetary matters can be, anyone facing divorce must stay informed and prepared for outcomes that may arise along the way towards achieving desired results within the context of settlement agreement negotiations, court hearings, and more.

Key Takeaway: Concealing assets during divorce disrupts the fair division of property, and introduces legal and emotional strain. Discovery of such deceit can lead to penalties like perjury charges, distrust amongst partners, fuels hostility, and complicates co-parenting arrangements post-divorce.

The Equitable Division of Assets During a Chicago Divorce

Illinois is an equitable division state, meaning that marital property division does not have to be split evenly. The court splits assets based on what each party deserves – meaning it could be split 50/50, 60/40, 70/30, or another ratio. If the parties cannot agree, courts will utilize the property division factors outlined in the Illinois state statutes during divorce.

Factors Considered in Equitable Division of Assets

There are 12 factors that Illinois law uses to determine how property should be split:

The Contribution of Each Party – The amount each party added to the marital estate, both financially and through homemaking.
Dissipation of Each Party – The hiding or wasting of marital assets.
Value of Assigned Property – A look at how much each party is taking to prevent either party from getting a disproportionate share of the assets or debts.
Length of the Marriage – The amount of time the couple has been legally married. .
Relevant Economic Circumstances – Understanding each party’s current financial position, including ensuring that the custodial parent can provide housing.
Prior Marriages – Identifying if either party already pays or receives spousal maintenance or child support.
Agreements – Prenuptial and postnuptial agreements.
Statuses – The overall picture of each party involved, including age, health, occupation, income, skills, employability, estate, liabilities, and needs.
Parental Responsibilities – The time and money required to raise any children between the divorcing parties.
Maintenance – The impact of maintenance or property given to either party in place of spousal maintenance.
Earning Potential – The amount that each party will likely earn and the events leading to that potential.
Taxes – The tax liabilities and consequences of each asset.

The courts only use these factors to make determinations in dividing marital assets. Any assets purchased or acquired during the marriage are presumptively marital property, and may include the marital home, other homes or properties acquired during the marriage, vehicles, household items, savings accounts, investments, business interests, retirement accounts, pensions, and life insurance policies.

The factors do not apply to non-marital assets, which may include inherited property, property gained before the marriage, or property gained after legal separation – these are not assets considered to be a part of the marital estate. However, if one spouse has a large amount of non-marital property, the court may determine that this spouse should receive less of the marital estate (because he/she will have a heightened financial status after the marriage because of the non-marital property).

Overlooked Hidden Assets and Concealment Tactics

While some marital assets are easily uncovered during a divorce, there are others that may not be as transparent. Some spouses may hide assets by using creative methods that mislead the court (and maybe even their spouse) during the time leading up to and during the proceedings. Our Illinois divorce attorneys know exactly where to look for hidden assets and are skilled at spotting concealment tactics commonly used by dishonest spouses.

Undisclosed Bank Accounts

Bank accounts opened right before filing or at the time of filing for divorce can be signs of a party’s attempt to conceal money. However, these are generally easily traceable through other accounts, i.e. transfers from a disclosed accounts to an unknown account or via credit card records, or payments to a credit card from an unknown source. These types of transfers will elicit question from your attorney to the opposing party and will need to explained.

Excessive Cash Withdrawals

Watch for habitual cash withdrawals from ATMs or “cash-back” at the grocery store. This can often appear as frequent purchases of Visa gift cards which allow the party to squirrel away money under the radar.

Offshore Bank Accounts

Offshore banking, while legitimate, have been misused as a tool for concealing assets, especially during contentious divorces. While offshore banks provide services like privacy protection and currency diversification, they can become conduits for dishonest spouses who deposit large sums into these foreign accounts, making it difficult if not impossible for local courts to reach them.

Sold or Re-Titled Assets

Some parties will sell their assets in order to hide cash such as motorcycles, cars, collections, even business equipment or machinery. Another, less obvious way to attempt to hide assets is to re-title them, often to a parent or sibling thus allowing the offending party to arguably keep the property without it being considered a marital asset. A smart attorney, like those at The Law Offices of Robert Buchanan will be aware of this tactic and know to look for it.

Cryptocurrency

A new frontier that poses challenges in uncovering hidden assets involves cryptocurrencies such as Bitcoin. Bitcoin transactions, though recorded on blockchain technology, still maintain anonymity with only wallet addresses being publicly available – identities tied to those wallets remain undisclosed.

A spouse could exploit this feature, moving substantial amounts from marital funds into cryptocurrency without detection, although these funds generally are traceable with some additional effort.

The Consequences of Hiding Assets in a Divorce

Although it may be appealing to try and hide assets during a divorce (including lying on a Financial Affidavit!), the consequences of doing so can be severe. Not only does it diminish trust among parties, but it can tarnish the name of the party found guilty of financial infidelity. Three ways the court may punish someone hiding assets in a divorce include contempt of court and perjury charges, fines and jail time, and a change in the marital property distribution.

Invalidation of the Divorce

The most egregious consequence for lying under oath and hiding assets during divorce would be to have your entire divorce invalidated and there is recent case law in Illinois to support this. See In re marriage of Brubaker, 2022 Ill. App. 2d 200160 (Ill. App. Ct. 2022).

Contempt of Court and Perjury Charges

Lying under oath in a court of law is called perjury. If a spouse lies about property ownership and other finances during a divorce, especially in front of a judge, they may face perjury charges and be found in criminal contempt of court for impeding or obstructing the court proceedings. The spouse could face criminal charges and a trial for their misrepresentation in the courtroom. These charges will be placed on the spouse’s permanent record. These are generally the consequences of falsifying information on your Financial Affidavit.

Fines and Jail Time

Perjury is a Class 3 felony in the state of Illinois. This is punishable by up to five years in prison and a fine. Criminal contempt of court is punishable also by jail time and up to a $500 fine. Most spouses who try to hide their financial assets during a divorce get caught – which makes the consequences more severe than just being truthful during the initial proceedings. And, if it’s you who is considering hiding assets, just don’t.

Changes in Marital Property Distribution

If a judge finds that a spouse has been untruthful about their financial picture during a divorce, it is possible that they will further punish the party by changing how the assets are divided. The spouse who hides assets loses credibility in the court and may lose some of the bargaining power during the property division process. In some cases, a spouse who hides an asset may lose that asset entirely – and the judge may award it to the other party as a result of the financial infidelity.

Ensuring Fair Settlements in a Chicago Divorce

Courts take great care to ensure fair settlements in divorce cases. They employ various methods to uncover hidden assets like review of tax returns, investment reports, and auditing financial statements and bank records. A detailed examination of financial statements and bank records can reveal irregularities that raise red flags and signal the courts to take a deeper look at the entire financial picture.

Key Takeaway: Hiding assets in a divorce, by any means, can lead to severe penalties such as jail time and fines. It’s crucial to stay alert for any signs of concealed wealth during the settlement process.

Allies in Uncovering Hidden Assets During a Divorce

Your Chicago divorce attorney may employ the help of allies during your divorce settlement – especially if it is suspected that the other spouse has been hiding assets. These allies play a crucial role in unearthing secrets and hidden assets that may be pivotal in the settlement process. Your attorney may call on private investigators or forensic accountants, as their skills are specifically useful in finding financial infidelities of dishonest spouses.

Private Investigators: Tracking Down Concealed Marital Property

A private investigator (PI), in addition to your legal team, trained in meticulous information gathering, can be helpful when suspicions arise about marital property being concealed during the divorce proceedings.

Potential undisclosed real estate holdings or joint accounts where large cash withdrawals have been made might raise red flags. Hiring a PI may be useful to investigate these concerns and may help avoid infringing on privacy laws while finding hidden assets. Again, a strong legal team, like that at The Law Offices of Robert Buchanan, will also be able to do this.

Forensic Accountants: Unearthing Hidden Financial Assets

Your legal team will be able to provide much of this analysis as well but forensic accountants delve deeper into business records and look for signs indicating that martial monies are hidden within the business. These professionals are generally hired in more complicated cases that require greater analysis than your legal team can provide.

These professionals analyze bank statements meticulously. They look out for discrepancies between reported earnings versus actual deposits, which suggest concealed sources of income. They may even review tax returns closely looking for inconsistencies between declared lifestyle expenses and incomes, thus hinting at potentially hiding activities as well.

What Happens If You Find Hidden Assets Post-Divorce?

The emotional impact of a spouse hiding assets can be overwhelming, particularly when discovered post-divorce. However, you are not without legal options. In equitable distribution states like Illinois, the discovery of hidden marital income or properties after finalizing a divorce settlement could lead to further legal action – like a post judgment motion or completely reopening your case.

Key Takeaway: Discovering hidden assets post-divorce can lead to further legal action, potentially reopening your case. Courts take asset concealment seriously and may reassess the division of these assets.

FAQs in Relation to Penalty for Hiding Assets in Divorce

What happens if you hide assets during divorce?

Hiding assets can lead to severe legal and financial penalties, including fines, attorney’s fees, contempt of court charges, or even jail time. You may also lose a larger portion of your shared property. Attorneys and courts are skilled at discovering concealed assets, and you are not likely to get away with it.

Can you legally hide money from your spouse?

No. Concealing money or other marital assets during a divorce is illegal and can result in serious consequences under Illinois state law.

What is a red flag that a spouse is hiding assets?

Sudden changes in spending habits, secretive behavior regarding finances, or unexplained withdrawals from joint accounts could signal asset concealment during divorce proceedings.

What is considered hiding assets?

Hiding assets refers to the deliberate act of concealing property value to avoid fair division in a divorce settlement.

What to Do If You Think Your Spouse is Hiding Assets During a Divorce

Divorce is a complex process, and the stakes rise when assets are hidden. This is not as uncommon an occurrence as one might wish. Yet, the penalties for hiding assets in divorce can be severe both legally and financially.

Even after your divorce has been finalized, discovering hidden wealth could still impact your settlement. It’s never too late for justice.

If you suspect your spouse may be hiding assets, don’t hesitate to seek professional advice early on. Buchanan Law Group understands the emotional toll that dishonesty takes and can offer support every step of the way. Contact us today so we can guide you through this challenging time with expertise and compassion.