It can be difficult to determine how community property should be divided during a divorce. However, neither spouse should attempt to "divvy up" the assets on their own outside of court—and they definitely shouldn't attempt to sell or hide assets before the divorce has been finalized. That doesn’t mean they cannot try to sell off assets, but the court will order them to return either the asset or the money.

Selling Is a Form of Hiding Assets

Spouse Selling Assets Before DivorceThere are many reasons a spouse might want to hold back shared assets from a partner. If your spouse is angry, worried about being left with nothing, has more control over the family finances, or wants to keep certain funds because they feel entitled to them, they may be guilty of hiding assets by:

  • Selling marital property. It's a misconception that selling joint property and keeping the money won't "count" in the property settlement. If a marital asset is sold, the proceeds from the sale are also marital assets.
  • Giving gifts. A spouse may buy presents or gift large sums of money to friends or relatives, hoping to get it back later (or simply deprive you of the funds).
  • Making unauthorized transfers. A spouse may transfer large sums of money into trusts or a joint account with a third party.
  • Misusing corporate authority. Spouses who own businesses might use their corporate entity to conceal assets or delay profitable deals to artificially lower the business' value during divorce proceedings.
  • Destroying or disposing of assets. Spouses may donate furnishings and clothing, throw away valuable items, or destroy precious heirlooms out of spite.

Consequences of Selling, Gifting, or Hiding Assets

During the initial phase of divorce, you and your spouse will be required to turn over relevant financial information. If your spouse fails to produce certain documents, the judge can order your spouse to do so.

Your spouse could face significant penalties when the truth is discovered, including:

  • Contempt of court. If your spouse disobeys the order to produce information, the court may impose sanctions (fines) or jail time on your spouse.
  • Judgment in your favor. If a spouse has sold or moved assets without court approval, the judge may rule against your spouse on a particular issue.

Proving That Your Spouse Has Hidden Assets

The discovery process of divorce allows spouses and their attorneys, to exchange information about the marital property. This may include a wide variety of documentation, including tax documents, loan agreements, deeds, credit card statements, bank statements, canceled checks, wire transfer documents, stock certificates, and receipts.

These records must be carefully scrutinized to determine if assets are being underreported. The right property division attorney can assist you by:

  • Tracing assets. Tracing is the term used for analyzing accounts and cash flow during the marriage. By examining the path of money coming in and money going out, a forensic accountant can determine if fraudulent transactions were used to funnel assets away from joint accounts.
  • Searching for hidden bank accounts. Financial institutions can be subpoenaed to provide information about one or both spouses' accounts during a divorce. We can investigate whether your spouse set up a personal account, an offshore account, or other means of storing excess cash.
  • Examining debts. Tracing may uncover debts and liabilities that were taken out in your spouse's name only. Authorization documents and promissory notes can help prove your spouse authorized major transactions that you weren't aware of.
  • Inspection demands. If you believe that your spouse's holdings have been undervalued, you can ask to inspect or appraise the property yourself. For example, a painting listed as worth $1000 may be deemed worth $10,000 by an independent art dealer. You will need records for all accounts used by either spouse during the marriage.

It can be extremely difficult to find hidden assets in a divorce, especially if your spouse was the one in charge of banking and paying the bills. If you need help estimating the full value of marital property, The Law Offices of Molly B. Kenny can help. Call us today to arrange a private consultation, or use our online contact form to have us get back to you.


Molly B. Kenny
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Divorce and Child Custody Attorney Serving Bellevue and Seattle Washington