Divorce can be a traumatic event in someone’s life which brings up all sorts of strong emotions. The reason for this is obvious: divorce represents the breakdown of a relationship which was intended to be permanent. During this time, many people feel a sense of shame, embarrassment, failure, or all of the above. Things have gotten a bit better in this respect in recent times, in the sense that couples can divorce without facing as intense of a social stigma compared to what was faced in the past. Still, marital dissolution is among the most difficult things someone can undergo.
One common reaction is for spouses to fight over things which aren’t too important – a favorite plate, book, or souvenir. In many cases, this is just people letting their emotions get the better of them. In other cases, however, spouses take things a step further, and actively hide assets from the other spouse during divorce. What happens to hidden assets – or “undisclosed assets” – during divorce in Colorado?
Hiding Assets during Divorce is Illegal
When spouses split up, they are legally obligated to disclose their assets during the proceedings. This includes both marital property and separate property. Simply put, if a spouse omits, or in any way falsifies the report to the court on this matter, that spouse violates the law. Let’s consider an example: after marriage, a spouse begins a “secret bank account” which he or she uses to stash away funds. This secret bank account remains hidden from the other spouse all the way up until the divorce is filed. If, during the proceedings, the spouse fails to report this hidden bank account, that spouse will violate the reporting requirement, and can be found in contempt of court. If the bank account is uncovered, courts will typically award the other spouse with the majority of the assets, and can also impose jail time and additional fines on the offending party.
The Various Methods of Hiding
This example of the secret bank account is surprisingly not even close to the most common method used to understate or falsify asset reporting. Believe it or not, spouses sometimes go to extreme lengths to hide or understate their assets. Here is a short list of common ways a spouse may hide assets:
- Lending out money to friends or relatives
- Giving cash gifts to friends or relatives
- Deliberately overpaying the IRS and then applying the overpayments to future years
- Devaluing rental properties prior to the divorce by failing to find tenants, make repairs, etc.
- Deeding property to relatives prior to the divorce
- Deliberately undervaluing certain tangible assets, such as jewelry or artwork
These are just a few of the ways in which spouses falsify asset reporting. As you can see, some of these ways can be quite creative. Readers might think that these things would rarely happen, but remember that divorce can often bring out the worst in some people.
Contact the Drake Law Firm for More Information
In some cases, determined spouses manage to hide assets successfully, but in most cases the spouse does not succeed. If you lend out money to friends or relatives for no discernible reason, or if you significantly undervalue a painting, these things will usually be uncovered in the long run. And the penalties for doing so, as we’ve mentioned, can be quite severe. If you’re dealing with a situation in which you believe assets aren’t being properly disclosed, or if you need any additional information, contact the Drake Law Firm today by calling 303-261-8111.
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