During a divorce, property and assets will need to be divided. This process can be a complex legal matter — particularly for couples who share a significant amount of assets — regardless of whether the divorce is contested or amicable. In some cases, one of the spouses may be hiding money before the divorce or throughout the process.

In Delaware, marital assets and property are not necessarily split evenly. Instead, assets are split equitably, which means many factors will be considered when dividing property, including each spouse’s contribution to the marriage, child custody, lifestyle and the length of the marriage.

If you believe your spouse may be hiding assets during your divorce to avoid an equitable division of property, you may want to have an experienced family law attorney on your side. An attorney can help you navigate the process of the divorce, guide you through property division and help you overcome hurdles like a spouse who hides marital assets.

Why Would a Spouse Hide Marital Assets?

Some spouses may be concerned about how property and money will be divided in a divorce. If your marital assets are significant, your spouse may be tempted to hide assets from you, especially if the divorce is contested or they believe they worked for the assets and are solely entitled to them.

While every state has a set of rules for the division of property and assets in a divorce, states are generally categorized into two groups known as community property states and equitable distribution states:

• Community property states: In these states, marital assets are divided in a 50-50 split. Assets that either spouse had prior to the marriage are not included in this split unless they were mixed with marital assets.
• Equitable distribution states: In these states, assets are divided equitably based on the marriage’s particular circumstances. So while each spouse will receive a share of the marital assets, it may not be half. Most states fall into this category and consider various factors to determine which spouse gets what assets.

Delaware is an equitable distribution state, so your spouse may worry they will not receive as much of the marital assets that they are entitled to when you split up. Of course, if your spouse is caught hiding assets, they could face legal consequences and penalties.

What Assets Would a Spouse Hide?

There are many assets a spouse may attempt to hide. While you and your spouse may try to divide the marital assets yourselves, if you cannot come to an agreement, a judge will make the decision for you. Each spouse is entitled to keeping their own non-marital property, which is:

• Property you acquired in a trade for non-marital property
• Inheritance or property gifted to you from anyone other than your spouse
• Property that is non-marital according to a written agreement between both parties
• Property you or your spouse acquired prior to the marriage, along with the increase in the property’s value

However, assets that either spouse acquired during the marriage may be subject to division in a divorce. Common marital assets include:

• Vehicles
• Investments
• Vacation homes
• Business income
• Expensive jewelry
• Primary residences
• Homes used as rental properties
• Interest earnings on savings accounts and investments

To keep more assets for themselves after the divorce, your spouse may try to hide certain marital assets, including:

Bank Accounts

A bank account you and your spouse open during your marriage is considered a marital asset.

If you entered the marriage with your own bank account and kept it separate throughout the marriage, you may possibly be able to claim that the funds are your assets alone.

Otherwise, funds in bank accounts may be subject to equitable distribution in a divorce.

Pensions and Retirement Plans

One type of asset that a spouse may attempt to hide is a retirement plan or pension. 401(k) plans, IRAs and pension plans may be considered marital property in Delaware. While an unvested pension is also considered marital property, until it is vested, the spouse with the pension can only expect interest.

Before retirement accounts and a pension can be divided, they must be valued, which can be a complex process. After the assets are valued, they are split according to your settlement agreement. An attorney can handle this by creating a qualified domestic relations order, which will detail how your retirement accounts will be divided and will be submitted to the court and plan administrator for approval.

Inheritance and Gifts

In Delaware, gifts and inheritance are considered non-marital assets, even if you or your spouse acquires them during the marriage. One exception to this rule is when you give a gift to your spouse or vice versa. These are considered marital assets.

During a divorce, inheritances and gifts are not subjected to the division of assets unless you and your spouse combined them with your bank accounts or marital assets.

A spouse may try to hide debts as well. However, all assets, debts and income must be disclosed to the other spouse.

Techniques Used to Hide Assets

Some red flags that a spouse is hiding assets or finances during divorce include:

• Your spouse claims to make a low income.
• Your spouse has changed their patterns due to addictions.
• Your spouse hesitates to disclose financial information to you.
• You catch your spouse in a lie or engaging in deceptive behavior.
• You begin receiving new mail or your mail is rerouted to an office.
• The level of confidentiality changes between you and your spouse.
• Your spouse claims an asset has a lower value than you remember.
• Your spouse is exhibiting changes in their routine or habitual behavior.
• Your spouse is giving or loaning money without your consent or knowledge.
• Your spouse is making repeated and unusual cash withdrawals from your shared bank accounts.
• Your spouse has increased the amount of time they spend on the computer and close it or exit the screen when you walk into the room.

If you have noticed any of these signs, your spouse may be hiding marital assets from you, especially if you notice multiple red flags. Your spouse may attempt to use different methods to hide assets:

1. Paying a Nonexistent Employee

If your spouse owns a business, they may attempt to use their business to hide assets, such as by funneling money to a nonexistent employee. This act is as simple as writing checks to a nonexistent employee and voiding the checks later. Doing so can also reduce your spouse’s business revenue, making it seem like they have fewer assets.

2. Giving Money to Friends and Relatives

A spouse who wants to hide assets may involve a friend or family member. If your spouse does not have a business, they may instead try to hide assets by gifting money to a person who will return it following the divorce.

Additionally, if a spouse already has a new partner, they may use marital assets to make purchases for this person, leaving you and your spouse with fewer assets to divide.

3. Hiding Cash in a Safe

Spouses may also use safe deposit boxes to hide physical cash. Your spouse may be hiding a safe somewhere in your home or elsewhere. While thoroughly cleaning the home, you may uncover a safe with a hidden stash of money you were not aware of. You may even uncover money in an unexpected place, such as inside a book.

4. Failing to Report Income

Another technique a spouse may use to hide assets is failing to report income. If your spouse directly receives cash, they may be able to pocket a portion and choose not to include it in their financial statements.

As a result, your spouse may have more income than they have disclosed to you.

This technique can be especially obvious when the cost of your lifestyle exceeds your combined income. However, many cases of unreported income are less obvious and worth looking into.

5. Requests for Delayed Raises and Bonuses

Raises and bonuses are income sources that may be included in the marital assets during divorce proceedings. As such, the timing of these events can greatly influence how much of the marital estate is shared with you. To keep more money from you, a spouse may ask their boss to delay their bonus or promotion until after the divorce has been finalized.

6. Underreporting Value of Expensive Items

If you own antiques, artwork or other luxury items, your spouse may underreport their value. They may also choose to purchase new artwork or furniture so they can resell it later, though your spouse is unlikely to keep these items in your home. Instead, you may find them at their business or work location. For example, you may find your spouse has purchased an expensive new desk for their office.

What Should You Do if You Suspect Your Spouse Is Hiding Assets?

If you suspect your spouse may be hiding assets, it is essential to work with an attorney who can help you navigate the legal process of the divorce and uncovering these assets. Having an attorney on your side is especially important if you were not the spouse who managed the finances or you did not actively participate in managing your finances during the marriage.

There are also financial documents you should keep handy. Having these documents on hand will help you when you are filing a financial disclosure report and help you and your attorney determine the value of your assets and whether assets may be missing. Some paperwork you may need includes:

• Pay stubs
• Canceled checks
• Bank statements
• Loan applications
• List of known assets
• List of known liabilities
• All previous tax returns
• Credit card statements
• List of all income sources
• Brokerage account statements
• Employment history of both spouses
• Information on every property you both own
• Inheritances or gifts received during the marriage

How to Uncover Hidden Assets in a Divorce

Now that you know the techniques a spouse may use to hide assets, how do you uncover these hidden assets in a divorce? The best way to determine whether your spouse may be hiding marital assets is by being well informed about your assets and liabilities during your marriage.

However, most people do not expect to get divorced, so you may not have been keeping close tabs on what your spouse was doing with your money. Even if this is the case, you can still get legal assistance from an attorney and may be able to uncover any assets your spouse has attempted to hide. The discovery method — which can be formal or informal — is a way to find out the information necessary to prepare for a court trial:

• Informal discovery process: In the informal discovery process, a spouse can ask the other spouse for information about certain assets.
• Formal discovery process: In the formal discovery process, you may choose to include requests for inspections, oral depositions and written questions.

For many spouses, the formal discovery process may be more effective at uncovering hidden assets. You may also want to request financial documents and hire a forensic accountant.

Penalty For Hiding Assets in Divorce

Your spouse may face a penalty for hiding assets in the divorce. During your divorce, you and your spouse may quickly be required to complete a financial declaration in which you disclose every asset and source of income. Failing to disclose this information can have serious consequences.

If your spouse knowingly withholds information about assets or finances to prevent you from getting your share, the judge can impose a penalty, which can range from civil penalties to criminal penalties. If your spouse is given a civil penalty, for example, they may be given less of the marital estate to cover your attorney fees. If your spouse faces a criminal penalty, they may be charged with perjury and contempt of court that leads to jail time.

Schedule a Consultation

At Rahaim, Saints & Walstrom, our team of qualified attorneys can help you determine whether you have a case. As a client-focused law practice, you will be in good hands with our knowledgeable attorneys. We welcome client contact, communications and appointments.

We represent your interests in negotiations and litigation as necessary and take the time to discuss, listen and educate you on the law, the procedures and why we recommend a certain course of action. Our experience in family law can help you get the results you desire from your case. Contact us today at Rahaim, Saints & Walstrom to schedule a consultation.