New Jersey law requires divorcing spouses to disclose all their income, assets and debt as part of the financial disclosure process. This is essential to ensuring an equitable division of assets, as outlined in N.J.S.A. 2A: 24-23.1, as well as determination of child support, alimony, debt division, etc.
Spouses usually cooperate and act in good faith.
However, our East Brunswick divorce attorneys have come across situations where one spouse accidentally fills out these disclosures inaccurately. In rare cases, it’s done intentionally. This can have an impact in any case, but it becomes especially relevant in high net worth divorce cases.
If you believe your spouse is hiding assets in your divorce or you’re just now discovering it after the divorce is final, it’s imperative to immediately discuss these concerns with an attorney.
What Does it Mean to Hide Assets?
Hiding assets is the intentional concealment of marital property for the purpose of depriving the other spouse of that asset or its value.
There are numerous ways a spouse might try to hide assets. Some of those include:
- Making it seem an owned business earns less than it does or is worth less than it is. They might do this by holding off on a profitable business deal until after the divorce is finalized. They might pay salaries to non-existent employees. They might classify personal expenses as business expenses, make significant adjustments to their personal salary during the divorce or use shell corporations.
- Keeping money in offshore accounts that are less easy to detect.
- Gifting money to someone with the intention of having it returned after the divorce.
- Setting up a trust with the intention of obtaining those funds themselves after the divorce.
- Using marital assets to pay expenses for a new romantic partner (leaving fewer assets left over for division between the former spouse).
- Using a secret safe deposit box.
- Selling assets at a much lower value than they’re actually worth.
Sometimes, the failure to disclose is not intentional, and simply comes from not realizing all the relevant financial records needed. This happens a lot when one or both parties is representing themselves in court.
There are many ways our East Brunswick divorce lawyers can help clients investigate hidden assets and pursue fair recompense when it is found.
Penalties for Hiding Assets
It should be noted that when these legal documents are signed, the individual is swearing under penalty of perjury that they are telling the truth about their financial situation. If someone doesn’t disclose all the facts, fudges the value of certain property, understates their income or claim inflated expenses, it’s considered a violation of their fiduciary duty and potentially a crime.
Family law judges are not known to be forgiving when it comes to spouses hiding assets. Potential consequences might include:
- Offending spouse is ordered to pay the other’s attorney’s fees.
- Offending spouse is ordered to pay a fine.
- Offending spouse is ordered to pay the entire amount of the undisclosed asset – and then some – to the victim as a penalty.
- Judge forwards a case for perjury to criminal prosecutors, which could amount to jail time.
But even if there is no penalty at all, perhaps the most significant consequence will be the blow to your credibility. In a divorce case, your credibility is everything. The wronged spouse will have a much easier time obtaining concessions.
Pursuing Hidden Assets
Divorce attorneys concerned their client is being victimized by a former spouse hiding assets or filing less-than-honest financial disclosures would likely hire a certified divorce financial analyst or forensic accountant. These individuals would have the professional skill to comb through financial records and identify less-than-obvious inconsistencies.
If you don’t discover the concealment or inaccuracies until after the divorce is finalized, you might be able to have the case reopened. That’s not a guaranteed though. New Jersey R. 4:50-1 allows divorce cases to be reopened for mistake, newly-discovered evidence and fraud. However, if the court finds the information was discoverable prior to the marriage dissolution, a request to reopen the case may be denied. (Another reason to hire an attorney who will ensure you aren’t overlooking anything.)
Beyond this, you may be able to file a claim for an undisclosed asset. Most marital settlement agreements drawn up by attorneys contain some type of provision indicating that if it’s later discovered either party has an interest in an undisclosed asset, then the harmed spouse can claim an automatic interest in that asset.
Our longtime divorce lawyers can help you determine your options.
Contact us at (732) 810-0034 or email us through our website.