It can be tempting for spouses to hide assets in a divorce case, especially in acrimonious situations in which neither side wants to give the other a penny more than they absolutely have to. In such cases, spouses may feel as though they could get away with failing to declare some little-regarded assets. But in addition to being immoral and unethical, failure to disclose all finances during the division of assets process is illegal, and it comes with severe penalties.
For starters, spouses who are caught with hidden assets may have to pay their spouse's attorney fees. In more severe cases, a judge could dismiss the legal claim of a spouse who lied about their finances. In extreme cases, a spouse could even be incarcerated.
The legalities of the situation stem from the financial affidavit- a legal document required in all contested divorce cases. This document assists in the division of assets process by clearly listing all of a spouse's assets. When a spouse signs the financial affidavit, he or she is declaring that to the best of his or her knowledge, the information written on the document is true. If a spouse is later found to have had knowledge of assets that were not included in the affidavit, they could be found guilty of perjury.
The financial penalties involved in such a case are often higher than spouses may expect. Take, for example, the California woman who won the lottery 11 days before she filed for divorce. She did not reveal the $1.3 million she had won in the divorce proceeding; had she done so, half would have been awarded to her spouse. When her ex-husband later sued, the judge ruled that the woman had acted out of fraud or malice and gave the entire $1.3 million payout to the ex-husband.
Spouses, then, should take care to ensure that all of their assets are included on the financial affidavit. Sometimes, however, people still attempt to get away with an underhanded trick. Spouses who believe that their partners are hiding assets should speak to a qualified family law attorney for more information about their legal options. Professional assistance can help spouses avoid costly mistakes, and discourage dishonest behavior from the other party.
Source: Forbes, "What Are the Consequences Of Hiding Assets During Divorce?" Jeff Landers, Oct. 14, 2012