When it comes to divorce, New Jersey is an ‘equitable distribution’ state, not a community property state. Not every divorcing spouse, however, wants marital assets to be distributed equitably. These spouses often hide assets to tilt the balance of property division in their favor.
With a little knowledge, you can develop the ability to detect concealment and prevent your spouse from stealing from you before your divorce is even finalized.
Circumstances That Should Put You on Guard
Certain circumstances should put you on notice that your spouse’s motivation to conceal assets is probably high.
These circumstances include:
- Your spouse is the one who initiated the divorce, especially if it followed a long period of troubled marital relations.
- You are the beneficiary of a prenuptial or postnuptial agreement that your spouse might now regret signing. The idea that the agreement is ‘unfair’ might provide them with exactly the justification they are looking for.
- The value of the marital property is high. If you are involved in a high-asset divorce, remember that the more money is on the table, the greater the temptation to try and steal some of it.
- Your spouse is financially sophisticated and probably knows various ways to conceal assets. This is a particular concern if your spouse has a history of successfully concealing assets from the IRS.
- Your spouse has had sole control over your marital finances for a long time.
- Your spouse owns a business that is part of the marital assets. The temptation to conceal assets could be particularly high if your spouse participates in running the business and you don’t.
These aren’t the only circumstances that should arouse suspicion; there are others. If you are concerned that your spouse could be hiding assets, it is critical to be cautious and contact a divorce attorney immediately.
Ways That Spouses Hide Assets During Divorce
A determined and intelligent spouse with access to professional advice can think of many ways to conceal assets, including the following:
- Temporary gifts to friends and family (to be repaid only after divorce, of course)
- Fake debt that includes paying a non-existent debt to a friend who later returns the funds to your spouse
- Underreporting income and demanding cash payments is one effective way to do this
- Postponing business deals until after the divorce is finalized
- Starting a new company and transferring income or assets to it
- Placing assets in custodial accounts under a child’s name
- Establishing a trust that you don’t even know about to hide assets from you
- Transferring money to accounts in foreign countries, especially countries with strict banking secrecy laws
- Investing in cryptocurrency, which is hard to trace
- Failing to disclose accounts or properties titled in their name
- Purchasing large amounts of traveler’s checks
- Renting safe deposit boxes to store cash or valuables
- Buying perishable items (like expensive wine) and claiming to have already consumed them and then hiding them to sell later
The more financially sophisticated your spouse is, the harder it is likely to be to untangle their web of deceit. The assistance of a lawyer could be a necessity.
Special Case: Gambling to Hide Assets
Gambling is a topic worthy of special mention because New Jersey is home to Atlantic City. Your spouse might conceal assets by claiming gambling losses to hide cash flow. Alternatively, your spouse might actually incur real gambling losses.
The idea here is to have it both ways—keep and hide any cash they win, but write off any losses at your (50%) expense. This behavior leaves a legal paper trail that a skilled attorney should be able to follow.
Ways to Detect Spousal Concealment of Assets
Here are some ways to catch your spouse so as to prevent them from successfully concealing your assets.
Consider the following ways to help detect asset concealment:
- Investigate real estate transaction records: This information is publicly available. Remember, real estate titled in your spouse’s name only might still be half yours under the law of New Jersey or another state. You might expand your investigation to include other states or even other countries.
- Hire a forensic accountant to trace your spouse’s financial activities and uncover hidden assets or income.
- Consult a divorce lawyer: Work with an experienced New Jersey asset concealment lawyer to identify hidden assets.
- Offshore accounts: Look for evidence of offshore bank accounts or investments.
There are many other ways to investigate your marital finances–the foregoing is just the tip of the iceberg.
The Legal Consequences of Concealing Assets
Courts don’t like it when divorcing spouses hide assets, and they can come down hard on those who do.
Possible sanctions include:
- Assessment against your spouse of any legal fees that you incurred to investigate and uncover their fraud
- Contempt of court (for failure to comply with a court order) that can lead to civil or criminal penalties
- Deviation from an even division of assets— instead, 60/40 in your favor, for example
- Criminal charges, including fraud or perjury
- Loss of credibility in court, which can negatively affect your spouse in alimony, child custody, and child support proceedings
It is crucial to wait to seek sanctions until you have sufficient evidence. Making a claim without sufficient evidence could squander your credibility with the court.
Contact a New Jersey Family Lawyer for Help Dealing With Hidden Assets
If your spouse is the one who first sought your divorce, they might have been hiding assets for a long time–perhaps even years. Even if not, you’re likely to need the assistance of a New Jersey divorce attorney to reveal what, if anything, your spouse is hiding. Schedule an initial consultation with a skilled New Jersey family lawyer from The Law Office of Jennifer J. McCaskill, LLC at (732) 747-1882 as soon as you can.
