Divorce is a terrifying and frustrating process, one that involves taking numerous steps to protect your future. While you know how hard you worked or the pressures of starting over, do not make the mistake of hiding assets during your Wisconsin divorce. Doing so could put you at risk of financial loss.
If you believe your spouse is hiding assets or are worried that you may be guilty of doing so, contact Vanden Heuvel & Dineen, S.C. for the legal guidance you need.
Legal Framework in Wisconsin
Wisconsin is a community property state. That means any property obtained or acquired by either spouse during the marriage is shared property. It is not considered property owned by one spouse but by both. The same applies to income and debts, which are considered marital assets.
In community property states like Wisconsin, the divorce court’s objective is to split assets in an equitable fashion. That may be close to equal, but it is not always the same as a half-and-half division. That means that community property is divided in a way that provides each party with their desired or fair division of the property.
Full disclosure requirement
Note that when signing divorce documentation in Wisconsin, you must attest that you are providing full disclosure on assets and liabilities. You have the legal obligation to the court to be fully transparent in what you own, what you may have recently sold, and what you purchased. Any purchase or sale during a marriage must be considered as a component of the divorce proceedings.
In reality, being open and honest with the judge and other parties in your divorce is critical to protecting your financial future. In situations where one party hides assets from the other, the court will likely learn of this, and that could mean penalties.
Common Methods of Hiding Assets
There are numerous potential ways you could hide assets without realizing it. Any step you take to deceive the court can be held against you. Consider these examples of common methods for hiding assets in a Wisconsin divorce.
Undervaluing or omitting assets
A common mistake is not providing accurate value for the assets you own or omitting some of them. It is harder to hide assets in investment accounts since these tend to be easier to find. However, not providing accurate information about the value of real estate, vehicles, or other assets can lead to violations. Instead, individuals must ensure they provide an up-to-date record of the value of any assets and disclose the presence of such assets. In some situations, this may require an appraisal.
Transferring assets
Transferring assets from one person to another or moving funds from one account to another is also considered hiding assets. For example, a person may create a secondary savings account under someone else’s name where they transfer funds.
Another example is creating fake loans or debts. By providing less-than-accurate debts, a person may persuade the court to reduce alimony or minimize asset transfers.
Hidden bank accounts and investments
Not disclosing the presence of a bank account or investment account is another example. It may be harder for the court to find these accounts, especially if they are offshore accounts, they will likely be detected over time, and that could lead to substantial financial loss.
Business manipulation
Another potential route to hiding assets is by underreporting business income or inflating business expenses as a way to defray clarity on the value of the business, assets from the business, or pay received. Creating fictitious employees or vendors, for example, is an illegal act that could be used against you later.
Detection of Hidden Assets
In a high-value divorce or in situations where there is perceived potential of hiding assets, the divorce attorneys may employ the use of forensic accountants who will uncover hidden assets. Their work typically involves a comprehensive breakdown of the financials of each party, and tends to involve the use of software and forensic accounting strategies to uncover hidden assets.
Though every situation is vastly different, there are strategies they can use including tracing transactions individually and completing a financial analysis of a business. Each of these strategies can create trust concerns and that could create an indication of deceit when errors are substantial.
Legal discovery process
In every lawsuit, one party has the right to question and gather evidence on the other party, a process called legal discovery. Attorneys will use evidence they find to build a strong case against the other party. Some of the tools available for finding hidden assets from just a legal standpoint include interrogatories of all parties, subpoenas of back accounts, business accounts, and other financials, and depositions.
Red flags and warning signs
It can be difficult to pinpoint hidden assets to an untrained professional. However, because of how common this is, attorneys will pursue forensic accounting or full discovery in situations where they seed red flags, such as:
- Unwilling to provide access to bank accounts
- Changing shared account passwords
- Refusal to provide access to accounts
If hidden assets are expected or considered a possibility, your attorney will begin the process of taking action based on the evidence and potential value of those assets. This may include getting a court order to make information available to you.
Legal Consequences of Hiding Assets
Each situation is different, but some of the legal steps that may be taken include:
- Contempt of court: The court could hold a party in contempt, which may lead to fines and jail time, as this indicates a person violated the court’s orders.
- Perjury charges: A more significant legal action, if you are charged with perjury, that could lead to criminal charges and penalties.
- Sanctions and penalties: The court may impose impossible sanctions for hiding assets, such as the redistribution of assets and payment for legal fees associated with forensic investigations.
Financial Consequences of Hiding Assets
Unfavorable settlements are very common if the court determines assets were hidden. In short, the party that was not honest could be facing a more significant loss of assets in the divorce. There is also the potential that the court can make the dishonest spouse pay the legal fees associated with the matter of the other spouse.
More so, there are potential additional factors that can occur including damage to a credit score or financial standing when evidence documents the deceit. Additionally, there could be long-term repercussions especially if the court awards a much higher percentage of the divorce to the other party as restitution.
Ethical and Emotional Consequences
Also notable is that hiding assets creates a breach of trust, meaning that it will be hard to prove honesty in the future to the other spouse and to children. It may also cause reputational damage if a person’s actions are revealed to the public.
Best Practices for Full Disclosure
Be honest and open with the court about your financial situation including all details about income and assets. Full disclosure ensures that there is an equitable division of assets possible.
Seek out legal guidance as soon as possible. Even if you have already taken steps to hide assets or wish to pursue legal strategies to minimize loss, seek out the help of a divorce attorney in Wisconsin immediately.
Final Thoughts on Divorce and Hiding Assets
Full disclosure of financial well-being is critical in divorce. Ensure you are fully transparent in every situation to protect your financial future. Seek legal support immediately by contacting Vaden Heuvel & Dineen, S.C. for one-on-one support.
