Can Fraud Occur after a Divorce Settlement?
Financial fraud can have a devastating impact on individuals, families, and communities. Unfortunately, it is also a common occurrence in divorce cases. Fraudulent practices might have impacted you during your divorce case. Let’s explore the different types of financial fraud that can occur during a divorce, the impact it can have, and what steps you can take to protect yourself.
No divorce is easy, but when it comes to assets, property, and savings, tensions can become especially high. If you and your former spouse own a business together, things may be even more complicated – this could mean that researching for the right divorce lawyer in your area has never been so important in order to understand how yours might fare during the settlement phase of proceedings. Marie Drake of The Drake Law Firm – an experienced Golden, Colorado-based lawyer with over two decades of legal experience – even after your divorce, she can help you with post-decree modifications, including challenging financial settlements.
Hidden Assets – The Most Common Form of Divorce Fraud
One of the most common forms of financial fraud in divorce is hidden assets. This occurs when one spouse hides assets, such as cash, property, or investments, in order to keep them out of the property division process. This can result in an unfair division of assets and can leave the other spouse at a financial disadvantage.
Hiding assets is illegal during a divorce. During a divorce, spouses are legally obligated to disclose all assets – both marital and separate property. If one spouse withholds or misrepresents such information during the proceedings they will be in violation of the law. Take for example hiding funds away in a secret bank account: if this is not made known at the time of filing it can result in serious consequences. It can potentially lead to punitive action taken by the court. However, this is not always discovered during the divorce proceedings.
Debt Fraud and Divorce
Another type of financial fraud that can occur during a divorce is debt fraud. This happens when one spouse incurs significant debt, such as credit card debt or loans, without the knowledge or consent of the other spouse. This can also result in an unfair division of assets and can leave the other spouse with a significant amount of debt to pay off. In some states, known as Community Property states, property is divided 50/50. This can include debt. However, Colorado is not a community property state, it is a Common Law property state. Regardless of this, if your former spouse engaged in debt fraud, it could have affected how the divorce’s financial settlement was determined.
Other Types of Fraud During A Divorce
Here are some other types of fraud to look out for:
- Income fraud, where one spouse falsely reports their income to the court;
- tax fraud, where one spouse fails to report or misrepresents income to the IRS;
- insurance fraud, where one spouse fakes an illness or injury to collect insurance benefits;
- investment fraud, where one spouse misrepresents the value of investments to the court.
The impact of financial fraud in a divorce can be severe. It can leave the victim feeling financially and emotionally devastated, and can also impact the outcome of the divorce proceedings.
High-Income Earners need to be cautious during a Divorce
To protect yourself from financial fraud during a divorce, it’s essential to be vigilant and keep a close eye on your finances. Hiring the right type of divorce attorney can lead to a fair division of property. Here are some key things to consider:
- Gather all financial documents, such as bank statements, tax returns, and credit reports, and review them carefully. Depending on what your attorney can track, hiring a forensic accountant might help you save money down the road.
- Be wary of sudden changes in your spouse’s financial behavior, such as a sudden increase in debt or a decrease in income. Our attorneys can help you navigate the divorce process and protect your rights and interests. Even after a divorce has been finalized, we can analyze the financial settlement to determine if it was a fair outcome.
Divorce is a vulnerable time for many people, and it’s important to be aware of the different types of financial fraud that can occur and take steps to protect yourself. Remember, knowledge is power, and being informed and vigilant can help you navigate the financial challenges of divorce. If you’re currently considering divorce or if you’ve questioned how fair your divorce settlement is, pick up the phone and give us a call.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.