As part of the divorce process, you and your former spouse will separate your joint assets. This is one of the most contentious parts of the proceedings, and matters only get more complicated if one spouse is hiding assets from the other. However, there are places you can look to see if your ex-partner is hiding property and funds, particularly on their tax return. Hidden assets in Columbia divorce cases undermine the transparency necessary to ensure both spouses receive their equal share of property.
What Are Hidden Assets, and How Do They Impact a Divorce?
Hidden assets are any property, valuables, or funds that one partner keeps secret from the other with the intent to defraud them during divorce proceedings in the Circuit Court of Boone County or elsewhere. These assets can include any of the following:
- Real estate
- Secret bank accounts
- Undisclosed investments
- Business revenue
- Deferred income
There were 15,191 divorce filings in Missouri in 2024, with hidden assets being a frequent problem. Hiding assets not only impacts property division, but it also can affect spousal support. By hiding assets, the court will improperly evaluate the totality of a couple’s financial situation, likely leading to reduced alimony payments.
Failing to disclose an asset during a divorce is illegal in Missouri, and it can mean the perpetrator may face harsh consequences during property division. Hiding assets slows down the process for everyone, and it certainly works against your credibility in the case.
Unusual Income or Deductions
Among the biggest red flags of hidden assets on a tax return are unusual streams of income or deductions, especially when they’re for a significant amount of money. Unexplained or unaccounted-for income hints at secret bank accounts or hidden investments. Unusual tax write-offs suggest there are potential business expenses, certain retirement accounts, or specific savings accounts that you might not be aware of.
Any time you see money moving around that you can’t account for, it’s wise to tell your divorce attorney.
Overpayment of Taxes
While it might not seem like a problem on the surface, overpaying taxes is a sneaky way to hide money from a spouse. In a sense, this acts like a sort of savings account that’s difficult to detect without seeing a tax return. By overpaying on taxes, you would receive a credit for the following year’s tax return. By delaying this payment, you’re essentially taking it out of the marital estate if the refund is set to arrive after the divorce is finalized.
Disappearing Assets
If you have access to multiple years of tax returns, you might be able to find disappearing assets from one year to the next. If streams of income suddenly disappear or if an item that was consistently deducted is no longer included, this points to an asset being hidden. When an asset disappearing from tax returns coincides with the onset of marital issues, it becomes a massive red flag during a divorce case. Your divorce lawyer can compare each tax return to uncover evidence that assets have disappeared.
The Penalty for Financial Dishonesty
Financial dishonesty is a pervasive problem in the U.S. Two in five adults admit to having lied to or deceived their partner when it comes to their finances. While these types of dishonesty aren’t always a part of divorce proceedings, it’s important to know how common they are.
Hiding assets during a divorce isn’t just morally wrong; it’s also illegal. If the court finds that you’ve committed financial dishonesty, the judge may award the entire hidden asset to the other party, force you to pay your ex-spouse’s legal fees, and be even harsher on you when it comes to dividing the rest of the property. What’s more, you could also face contempt of court and criminal charges, which come with fines and potential jail time.
FAQs
What Assets Are Untouchable in a Divorce?
Under Columbia divorce laws, untouchable assets include assets owned prior to marriage, inherited property, gifts given specifically to one spouse, assets obtained after a separation, and any other item that might be covered in a prenuptial agreement. It’s important to have documentation showing how each asset should qualify as untouchable, especially if any funds are commingled with other marital property.
Why Do Courts Look at Multiple Years of Tax Returns During a Divorce?
During a divorce, the court looks at multiple tax returns to identify patterns in spending and income. This helps uncover any hidden assets and promotes the integrity of the process. It also allows the court to verify income, especially if one spouse is self-employed. Willful underemployment is a potential issue in divorce cases, and looking at multiple years of tax returns can prove this type of dishonesty.
What Constitutes Financial Misconduct in Divorce?
Financial misconduct in a divorce can include more than just hiding assets. Spouses commit financial misconduct by spending money wastefully, misrepresenting assets, or lying about debts to gain an unfair advantage during property division. The court has significant discretion in determining what actions fall under financial misconduct, so it’s always smart to be forthcoming with your assets.
What Happens If You Hide Assets in a Divorce?
If you hide assets during a divorce, you open yourself up to significant penalties, both in relation to the case and criminal. The judge may award the entirety of any hidden assets to your ex-spouse, and it may influence their decisions in separating the rest of the marital estate. In addition to its impact on the case, you may also face criminal charges for the fraud, which come with their own fines and potential jail time.
Hire a Divorce Lawyer to Help You Uncover Hidden Assets
Dealing with a divorce is stressful enough. The last thing you need is the added challenge of poring through financial documents looking for proof that your ex-spouse is hiding assets from you. Hire a divorce lawyer from Stange Law Firm to help you uncover proof of financial misconduct and fight for you in court. Contact us today to learn more about how we can protect your rights and secure the assets you deserve.
