Hiding Assets in Divorce
Avoiding the stress that accumulates prior to and during a divorce is not possible for most individuals. The issues surrounding divorce are sensitive, personal and have significant long-term implications that often overwhelm one's attempts to keep his or her emotions in check. Property division, especially among couples with substantial assets, is one of the more complex and contentious areas in divorce proceedings.
Disputes are particularly more likely if one spouse is the primary income-earner and controller of the assets. In this situation, the other spouse may have concerns about the concealment of assets in an effort to keep a spouse out the divorce settlement. The concealment or intentional omission of assets potentially subject to division in divorce will have serious financial consequences for the deceived spouse, and must be aggressively investigated if such action is suspected.
The former wife of Robert Foisie, a wealthy entrepreneur and benefactor of Worcester Polytechnic Institute, filed a lawsuit against Foisie and the school following discovery of a Swiss trust account containing $4.5 million that was not disclosed during their divorce — a trust that was later gifted to the school. Given how important accurate accountings of assets are to a fair divorce settlement, a understanding of the financial information all divorcing parties must disclose, and how to handle suspicions a spouse is hiding assets, is essential.
When issues are disputed in a divorce case, each party is entitled to request and receive certain information as part of a process called discovery. Discovery is an evidence-gathering procedure that allows parties in contested legal matters to obtain the information needed to present a case in Court.
In divorce, the crucial information that typically matters most is the financial resources of each party. Illinois law and local Court rules require both parties in a divorce proceeding to disclose all sources of income and property owned, both jointly and separately, as part of the divorce petition. In addition, the attorneys for each party will issue interrogatories (written questions) for the other side to answer and requests to produce certain documents related to financial resources.
The information collected is used to verify the veracity of the claims from the opposing party and unearth previously unknown matters. Gathering this information is crucial to avoiding a scenario involving a spouse agreeing to a property settlement that omits key assets from the marital estate.
While Illinois law requires full financial disclosure from both parties in a divorce, concealing assets is fairly easy if one spouse controls the finances — at least initially. With advances in digital technology, permanently hiding assets from the other spouse is more difficult. If there is a credible basis for believing valuable assets are being withheld, the other spouse can employ a forensic accountant to search for undisclosed income sources and/or property. These specially-trained professionals know how to spot irregularities in financial statements and determine the value of concealed property. Warning signs a spouse is attempting to hide assets include:
- Purchasing easily undervalued assets, such as artwork or classic cars;
- Transferring accounts or investment holdings to friends, family or business associates; or
- Suddenly, and without explanation, changing passwords to financial accounts.
If hidden assets are discovered while the divorce is pending, the innocent spouse may receive a greater share of the marital estate as a method of punishing the deceitful party. In fact, the party who attempted to hide the asset could face a complete loss of the asset's value in favor of the other spouse. Discovery of an asset is grounds to reopen a divorce case on the basis of fraud. However, post-divorce judgment litigation is costly and time consuming. Further, hidden assets are not always recoverable. Hiring an attorney experienced with forensic analysis of financial records in the beginning is best way to avoid losing valuable property rights.
Consult an Illinois Divorce Attorney
Divorce is an emotional process that is compounded by the stress of the legal process. Working with an experienced Barrington divorce attorney can mitigate some of this taxing strain, and allow you to focus on moving forward with your life. The Law Office of Nicholas W. Richardson, P.C. represents clients in a variety of family law matters, and structures each case to keep the best interests of the client as the primary concern. If you live need family law assistance, contact Attorney Richardson for a free consultation.