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What Happens If My Spouse Is Hiding Assets In A Divorce?

The main reason a spouse is likely to hide assets during divorce proceedings is to avoid the division of those assets with their ex. Hiding and wasting assets are usually the main tactics a spouse will employ in an attempt to stop their spouse from receiving a fair share of the marital estate.


Usually, a divorce settlement is fair and equitable, and marital property is often divided relatively equally between spouses. However, if a spouse is caught hiding assets, this is one of the only times a Judge may award a disproportionate amount of the marital estate to one spouse to account for the wrongdoing. Depending on the extent of the fraud and the remaining community estate, a spouse may also be awarded a monetary judgment to account for their losses.


Although a Judge may rule in your favor if your spouse has been hiding assets, proving their misconduct to the court can be challenging. Spouses will go to great lengths to cover their tracks and hide their fraudulent activity. Uncovering hidden property can be even more challenging in high-asset divorces as the methods and avenues for successfully hiding assets increase substantially. To protect yourself and expose their wrongdoing, you will need a skilled divorce attorney with experience in fraud cases and the support of a financial professional. 


Unfortunately, spouses have a lot more to lose in high-asset divorces, and hiding property and fraudulent behavior is not uncommon. The caliber of your divorce attorney is crucial to achieve a successful outcome in a divorce involving fraud. These cases differ substantially from standard divorces, and you must be confident in your attorney’s ability to secure a fair settlement and protect your interests. 


Youngblood Law, PLLC.’s divorce attorneys have successfully represented many high-net-worth clients in divorces involving hidden assets. Our experience allows us to identify warning signs of fraud and grants us greater insight into the potential avenues your ex is likely to take to hide property. Our familiarity working with skilled forensic accountants means we can locate and secure evidence swiftly and efficiently to support your case and ensure you receive a fair settlement. 


No one should suffer as a result of their ex’s fraudulent actions. With reputable legal counsel, you do not have to. If you suspect your ex is hiding assets in your divorce, contact Youngblood Law, PLLC. as soon as possible for a swift intervention to protect your estate. 


Contact Youngblood Law, PLLC. today by calling our team at 817-369-3970 to book your initial consultation.

Why Would A Spouse Hide Assets In A Divorce?

When a couple divorces, the marital assets should be divided between spouses fairly and equitably. A spouse may attempt to hide or destroy marital property to avoid this division and ensure their spouse doesn’t receive a share of these assets in the divorce settlement. Even though destroying assets is completely irrational, some people will do so out of spite or for other emotional reasons.  


A spouse could hide assets through various means, such as moving funds into new or hidden bank accounts, changing the names on accounts or property deeds, or gifting property to a friend or family member. 

How Should Assets Be Divided Under Texas Law?

Texas is a community property state and, as such, has strict laws that govern the distribution of property between a divorcing couple. To understand if and how your property could be divided, you must establish if the asset in question is deemed community or separate property. Generally, the law determines that any property earned or acquired within the marriage is considered community property. This can apply to financial resources, retirement accounts and 401ks, investments, vehicles, boats, jewelry, real estate, and marital home.


An asset may be considered separate property if either spouse owned that asset before the marriage. Separate property cannot be divided in a divorce. However, a reimbursement claim may sometimes be brought against separate property. Likewise, revenue or resources produced by the separate property might be divisible in the divorce.  

Community Property

Community property should be divided between spouses in a divorce fairly and equitably. Texas law does not specify an exact split or define exactly what constitutes ‘fair and equitable.’ This will be unique in every divorce, and to some degree, this is down to the court’s discretion.

Spouses may negotiate between themselves and their attorneys to determine the split of marital property or take the decision to a trial for a Judge to have the final say. This negotiation process can be challenging and time-consuming, particularly for couples of a high-net-wort with an extensive portfolio of assets to divide.

Separate Property

If an asset is deemed separate property, it is not subject to division in divorce proceedings. The spouse who owns the asset will maintain ownership after the divorce unless they choose not to. This could include real estate, which you purchased before you were married, or a gift given specifically to you during your marriage.

Disclosing Assets In A Divorce

Generally, in the early stages of a divorce, the spouses will each complete and inventory and appraisement. This is a list of assets owned by the parties and their approximate values. Supporting documentation is also provided if available. The inventory and apprasment provides enough detail for attorneys to make reasonable recommendations to their resepctive clients about settlement proposals.  


However, many larger estates have a more complex portfoli of assets. Sometimes, fraud is supected when the divorce begins. In either case, an inventory and apprasment is inadequate to account for suspected hidden assets. In these cases, formal discovery is required. Discovery is the term used to describe the legal process of formally requesting the production of documents and answers from a spouse. In cases with complex financial assets or suspected fraud, discovery should allow for detailed professional forensic analysis.  


Texas’s discovery laws require spouses to provide vital information and financial documents during divorce. Discovery should require the spouse to supply information on their real estate holdings, insurance policies, pension and retirement accounts, taxes, investments, businesses, and financials such as bank records. This disclosure normally forms the foundation of marital property negotiations between spouses and their attorneys. But when fraud or waste is suspected, discovery is the likely the only way to get a true picture of the assets. 


This process is more complex for high-net-worth individuals as they typically own more assets and have more complicated financial affairs. Intentionally providing incorrect information or failing to disclose assets in a divorce can lead to penalties and impact the divorce settlement.

Concealing Assets In A Divorce In Texas

If a spouse is found hiding assets in a divorce proceeding, a Judge may award the other spouse a greater portion of the marital estate to compensate. Similarly, they could also be ordered to pay the other spouse’s legal fees. Additionally, hidden assets could lead a Judge to suspect fraud.

Actual Fraud

If a spouse undertakes acts that intend to deceive their spouse relating to the community estate, they may be committing an act of actual fraud. Typical examples of actual fraud often include involving a third party to hide or destroy assets. Often a spouse will lie to a third party who is unaware of the act they are involved in. 

Constructive Fraud

A spouse may commit constructive fraud in one of two ways. If a spouse wastes marital property by selling, excessively spending, or disposing of community assets without the other party’s knowledge and consent with the intent to affect the other spouse’s share of the property, this could be constructive fraud. 


Similarly, a spouse may commit constructive fraud if they breach their fiduciary duty to the other spouse. the fiduciary duty between spouses means that both spouses are obliged to act in the best interests of each other during the marriage. If a spouse breaches this duty, they could have committed constructive fraud.


A prime and common example is when a spouse spends significant marital money on a paramour. While the courts typically do not become alarmed about a spouse having an affair, the court can reimburse the innocent spouse with a disproportionate division of the marital estate when a spouse has spent significant marital funds. 

What Happens If My Spouse Is Hiding Assets In A Divorce?

The Texas Family Code states that a spouse wronged by fraud should be compensated in the divorce settlement to counteract this wrongdoing and ensure they receive and ‘just and right’ division of property. To achieve a just and right settlement, the defrauded spouse could be awarded an appropriate portion of the marital estate, a monetary judgment in their favor, or both. To inform this decision, the court will consider the value that the community estate was depleted by and the value of the remaining estate and divide the community property accordingly. 

Proving Your Spouse’s Financial Misconduct

To ensure the final divorce settlement you receive is fair and takes account of your spouse’s assethiding, you must prove this to the court. Any accusation of fraud must be substantiated with strong evidence, whether you plan to use this as leverage in out-of-court negotiations or in the courtroom.


If you suspect your spouse of hiding assets, you and your attorney should work with a forensic accountant to investigate your spouse’s financial affairs. An investigation can include reviewing financial records such as bank statements and insurance policies and speaking to family members and friends. 

Hiding Property In High-Asset Divorces

Unfortunately, high-net-worth couples are often more susceptible to their spouse hiding assets. A high-asset divorce presents far more opportunities to hide assets as a couple usually has more bank accounts, property, and methods of concealing assets. 


When a spouse hides assets and commits fraud, the immediate reaction is often to take the case to trial for a Judge to make the final decision on property division. However, high-net-worth couples should approach the idea of a divorce trial with caution. Although a Judge will make a just and right decision on property distribution, often, they may not consider the financial implications of the settlement on the estate.


For example, the settlement may require that marital assets are sold, and the profits are distributed between spouses, as this is the fairest way to ensure both parties receive their fair share. However, selling a large marital estate can have significant tax implications and may not be the most financially appropriate decision for assets such as investment holdings or real estate. Negotiating a settlement outside of court that still accounts for a spouse’s fraudulent actions can benefit both parties in a high-asset divorce and avoid wastage and unnecessary costs. 

Protecting Your Marital Assets

You and your attorney have a range of tools and legal mechanisms available to you to help protect your assets in the divorce process. For example, your attorney can petition the court for a financial restraining order, freezing the marital assets and preventing either spouse from making large withdrawals or moving and hiding property. This approach can be particularly beneficial if you suspect your spouse may attempt to hide assets or to protect any additional property if your spouse has already made significant financial transactions.


Typically, the first restraining order issued by the court will be temporary. When the temporary order expires, the Judge will hold a hearing to review the order for a possible extension if required. Your attorney can argue to the court that your spouse poses a risk to marital assets, and thus the order should be extended until your divorce is complete. In Texas, the courts usually convert the restraining order into an injunction, and make the injunction binding on both parties. The injunction will run for the duration of the divorce proceedings.


Your divorce attorney can also help to uncover hidden assets and prove your spouse’s wrongdoing to the court. In addition to proving fraud, another essential element of ensuring you receive a fair settlement is proving the value of the loss to the estate caused by your spouse’s actions. This valuable information will support the Judge to make a fair and equitable decision when assigning property to either spouse. 


Similarly, before your divorce reaches a trial, a skilled attorney can use evidence of your spouse’s fraud and powerful leverage to negotiate a settlement in your favor. This approach can be especially beneficial for high-net-worth couples as it grants the opportunity to resolve property division without a Judge. 

Youngblood Law, PLLC. Attorneys: Ensuring You Get TheFair Treatment You Deserve In Your Divorce

Losing your financial assets as a result of divorce fraud is extremely distressing. Fortunately, with strong legal representation, you do not have to remain a victim of your spouse’s wrongdoing. With an experienced divorce attorney by your side, it is possible to uncover evidence and prove your spouse’s fraud to the court. In turn, your final share of the marital estate can account for this fraud and compensate you accordingly. 


In some situations, the extent of your spouse’s fraud may be so extreme that the remainder of the community estate is insufficient to account for your losses. In this situation, the court can award a monetary award to compensate you. This is why it is essential that your attorney can not only prove that fraudulent activity occurred but also prove the extent and value of the fraud. 


At Youngblood Law, PLLC., we will work tirelessly and seek expert financial advice to uncover hidden assets and gather sufficient evidence to prove the extent of your spouse’s misconduct. We will also employ methods such as financial restraining orders promptly to protect you from any further fraudulent activity and preserve the estate. 


Divorces involving fraud are complicated and intricate cases. These intricacies are further magnified by the unique challenges that only high-net-worth couples face during a divorce. Fortunately, the divorce attorneys at Youngblood Law, PLLC. have extensive experience successfully navigating these complex and challenging situations. 

Our attorneys’ experience, tenacity, and skill mean the Youngblood Law, PLLC. team is best placed to defend your estate and secure a fair and equitable settlement in your high-asset Texas divorce. 


Contact our legal team today by calling 817-369-3970 to book an initial consultation and discuss how we can help you take control and protect your property. 

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