How To Handle Hidden Assets and Other Forms of Financial Deception During Divorce

In many marriages, one spouse handles the family finances. This can cause you to have an unclear understanding of your family’s financial situation when it is time for divorce. In some high-conflict cases, this one-sided understanding can be manipulated into outright financial deception. But how can you tell if your spouse is hiding assets in your divorce?

Should You Ever Not Disclose Assets During Divorce?

It is never a good idea to lie to the court. False statements knowingly made under oath constitute perjury may subject you to civil and/or criminal contempt penalties. Even if you believe that you have a right to keep control of a specific financial asset, you must still disclose that asset during divorce. Unlike many other states, Connecticut does not allow parties to carve out “separate property” and avoid having that property subject to distribution during divorce. Even if you owned it prior to the marriage or received it as a gift in your name only, your spouse is still entitled to an “all property equitable distribution.”

That doesn’t mean there aren’t ways to prioritize retaining certain property. Your attorney can help you develop the legal arguments that advocate for high-priority property to be awarded to you in the end. However, concealing assets will only create more conflict, higher attorney fees and costs, and possibly expose you to sanctions for contempt of court.

Common Forms of Financial Deception in Connecticut Divorces

Financial deception means more than just hidden assets. There are many ways that a party can create trouble for themselves, and the court, by misrepresenting their financial circumstances, or improperly moving money around to try to shield it from property distribution:

• Underreporting income on tax returns
• Hiding cash payments or tips
• Concealing bank accounts
• Undervaluing real property, vehicles, and other high-value assets
• Manipulating business values or business-owner compensation
• Holding onto bonus checks received during the divorce
• Transferring funds to trusts, adult children or third parties
• Transferring funds into offshore accounts
• Removing personal property from the marital home
• Transferring funds between accounts to conceal withdrawals
• Reassigning direct deposits of wages or salary income
• Creating fake debts (especially personal debts to family members)
• Purchasing cashier’s checks, traveler’s checks, or savings bonds
• Failing to disclose digital accounts such as CashApp, PayPal or Venmo

Connecticut Automatic Orders Uncover Hidden Assets

When you file for divorce, legal separation, custody or visitation in the Connecticut courts, certain “automatic orders” will be issued by the court. These orders prevent either party from selling, hiding, or transferring marital assets without permission from the other party until the court can enter a final judgment resolving the case including orders regarding the use or disposal of the funds.

If your spouse violates the Automatic Orders, you and your Connecticut divorce attorney can file a Motion for Contempt of Automatic Orders. This will allow the Court to hold your spouse in contempt if it determines that they willfully violated the terms of the Automatic Orders. This could trigger financial sanctions, such as fines or even jail time until the contempt is purged by payment or the posting of a bond.

In addition, every Connecticut divorce requires the parties to sign financial affidavits designed to provide both sides with a clear and accurate picture of the family finances. This is often the first step to discovering hidden assets, allowing your attorney to dig deeper where more information is needed. Each party’s financial affidavit must disclose all:

• Real estate
• Personal Property
• Brokerage accounts
• Bank accounts
• Retirement accounts and pensions

They are signed under oath as a sworn document. If you fail to disclose any assets, the Court may consider it “fraudulent concealment.” Fraudulent concealment claims allow you to file a post-judgment motion in your divorce case if you discover hidden assets, to receive an equitable division of their value.

How to Find Hidden Assets in Divorce and Uncover Financial Deception

If you believe your spouse has hidden assets or used financial deception to improve their position in the divorce, you should tell your attorney right away. Often, strategic uses of discovery tactics and forensic accountants can uncover traces of the hidden assets, allowing you to prove their existence, and your spouse’s misconduct to the Court.

Discovery is the process in every legal case (including divorce) that allows one party to request production of documents, ask questions called “interrogatories”, and request admissions from the other party in an attempt to develop the case. There are rules that prevent a party from making false statements in this discovery process. There are also tools like subpoenas that allow your attorney to get information from third parties, such as banks, employers, and financial advisors.

In some cases, you can hire a forensic accountant to help identify and uncover hidden assets by:

• Examining past tax returns to find discrepancies in reported income, deductions, or changes in financial patterns
• Tracing transactions to find money moved between accounts or transferred to third parties
• Locating undisclosed bank accounts
• Identifying lifestyle expenses and spending that can reveal hidden income
• Business valuations to properly determine the fair market value of business assets
• Digital forensics to discover cryptocurrency accounts or digital assets

With this information in hand, you and your attorney can make the case that your spouse should not be allowed to benefit from their financial deception, giving you a more favorable outcome in your divorce.

The Connecticut divorce attorneys at Lawrence & Jurkiewicz, LLC represent divorcing spouses and parents throughout the greater Hartford area and the Litchfield County area. We can help you uncover hidden assets so you get a fair share in your divorce. We offer consultations by in-person appointment, phone conferences and zoom meetings. Please call us at (860) 264-1551 or contact us to schedule a confidential consultation to see how we can help you.