When going through a divorce, a key step in the process is for each party to provide full disclosure relating to all financial holdings, income, and debts. The purpose of this is to ensure an equitable division of property among the parties and to determine fair support awards if necessary. In some cases, one or both parties may attempt to hide or fail to fully disclose their finances, which can result in costly and delayed litigation.
If you suspect that your spouse is not being fully transparent with respect to financial disclosure, it is best to raise this with your lawyer as soon as possible. Steps can be taken to locate assets, ascertain income amounts and more. But what are the signs to look for? How do you know if your spouse is hiding assets? The following are a few key behaviours to take notice of and raise with your lawyer:
Separate Bank Accounts
If your spouse maintains accounts that you don’t have access to, these funds still must form a part of the marital property for the purpose of division. Keeping a separate account may assist couples with the division of financial responsibilities in a marriage, but it does not serve to keep funds separate in a split. If you notice mail from unknown financial institutions in your spouse’s name, this may be a sign that they have opened a separate account (or acquired a debt unknown to you, such as a credit card or line of credit). Be sure to discuss any suspicious activity with your lawyer.
Large Loans or Gifts
If your spouse makes large loans or gifts of money or large assets to friends or family, this could signify an attempt to reduce the assets they have on hand, and in turn, reduce the amount to be divided as family property. Sometimes a person will merely disguise the transaction as a loan until the family matter has been resolved, and then will reclaim the funds or asset after the fact. If you notice suspicious withdrawals or transfers from joint accounts, again, this is something to mention to your lawyer right away.
Using Cash for Large Purchases
In this day of electronic banking, most large purchases are made with a debit or credit card. If your spouse is making large withdrawals and using cash more than usual, this may indicate that they are trying to reduce their cash on hand in order to influence the division of property.
Cash Income or Underemployment
A person who is paid in cash, or “under the table”, has significant leeway to disguise their true income. Without formal records such as invoicing or paystubs, it can be difficult to ascertain the true amount that a person has earned in a given year. This can be particularly common among those who are self-employed or work as independent contractors. Income tax records can be helpful, so long as the person has been honest in their tax reporting.
Another way a person can reduce their income to affect support awards is to become deliberately underemployed. If a person is earning a modest salary, after all, how can they be expected to pay spousal and child support?
In both of these cases, the courts have remedies that can be applied. Specifically, the court can choose to impute income to a person who claims to be earning less than makes sense given their profession, or is deliberately in a job that pays beneath their earning potential. The court will calculate a fair amount based on the person’s qualifications, past jobs, and experience and impute that income to them in order to calculate child or spousal support awards.
Seek Qualified and Knowledgeable Legal Advice
If you have any concerns at all about your spouse hiding assets or failing to disclose income, you should speak with your lawyer as soon as possible. They will carefully review your situation and advise you of all of your options.
The family law lawyers at Mincher Koeman are exceptionally experienced when it comes to dealing with a party who is less than forthcoming about finances. We will work with you to ensure that you receive a fair distribution of assets and, if applicable, a support award that accurately reflects the true financial positions of the parties. Contact our office today by calling us at 403-910-3000 or contact us online.