Unequal Distribution of Wealth: When A Spouse Hides Money in Divorce

Hiding cash and other assets from a spouse in contemplation of divorce is an age-old problem. In modern times, the behavior is not gender specific nor is it exclusively the province of the rich.

Financial infidelity is a huge problem for the deceived husband or wife and can be especially harmful to the family if the innocent spouse has major responsibility for the care of the children. Sometimes, a divorced spouse close to poverty needs those hidden assets to stay afloat.

A party to a divorce has an absolute duty to openly disclose all assets and liabilities to the other spouse and to the court. Fair division of marital property depends on it, as does the determination of what level of child support and spousal support (alimony) is reasonable. A spouse who hides assets in divorce and gets away with it may cheat his or her children, as well as the ex-spouse, out of the standard of living and support the law would otherwise entitle them to.

If you suspect your spouse is hiding income or assets from you in contemplation of divorce - or even if you aren't yet to the point of divorce - speak to a lawyer with experience in forensic accounting. Often a divorce attorney works with an accountant skilled in investigating tax and other financial records to uncover fraudulent activity. If your husband or wife is not good at financial deception, it may not take much to discover the behavior.

Common schemes and red flags include:

  • "Loaning" money off-the-books to a friend or romantic partner that is conveniently "repaid" after the divorce
  • Buying gold, collectible art, antiques, vehicles or other valuable items to stash away
  • Understating the value of an asset
  • Opening secret accounts in his or her own name
  • Using mailing addresses other than the home address
  • Spending significant time in another city or country

Be wary if your spouse acts defensively or elusively when you ask about financial matters, especially if he or she tends to be the one who controls the family purse strings. Dishonesty in other matters can also be a red flag. If he or she has no problem lying to other people, why not to you in your marriage?

The dishonest spouse, however, is playing with fire. If he or she does not disclose money or assets in a divorce action and the deceit is uncovered, it may be a fraud on the court that could subject the perpetrator to sanctions and fines. Extreme cases could bring criminal prosecution for perjury, tax evasion or fraud.

If you face divorce, be sure you find a reputable family law attorney to educate you about your rights and fight for your interests. It can sometimes feel easier to give up when you are emotionally weary, but a knowledgeable legal professional on your side can make all the difference.