Is There a Penalty For Hiding Assets In a Divorce?

This article explores the stringent obligations placed upon divorcing parties to provide “full and frank” disclosure of their financial circumstances.

Any attempt to obscure, transfer, or dispose of assets before divorce is not only frowned upon but is also met with substantial penalties. The consequences of such actions are severe, ranging from a recalibration of the financial settlement to criminal charges, signalling the gravity with which the courts view this form of deception.

Hiding money and disposing of assets before divorce is not a new trick, however, most people don’t understand the potential consequences of such actions.

Can My Spouse Transfer Money Before Divorce? – We have written about transferring money before divorce in more detail as spouses are often worried that this behaviour could reduce the overall financial settlement.

Can you hide assets in a divorce?

No, you should not hide or conceal assets in a divorce. It is both unethical and illegal, and it carries serious legal consequences.

If discovered, you could face penalties such as a larger settlement awarded to your spouse, payment of legal costs, and even contempt of court, which may result in fines or imprisonment.

The court employs various methods to uncover hidden assets, so full and honest disclosure is essential.

Is there a penalty for hiding assets in a divorce?

Here are the potential penalties a spouse can face for hiding assets in divorce:

• Financial Reassessment: The court may order a reassessment of the financial settlement, potentially leading to a less favourable outcome for the party found guilty of hiding assets.
• Contempt of Court: Hiding assets can be seen as contempt of court, leading to fines or even imprisonment.
• Costs Orders: The court may order the party with hidden assets to pay the other party’s legal costs.
• Fraud Charges: In extreme cases, hiding assets can result in criminal fraud charges.
• Loss of Future Claims: The deceiving party may lose the right to make any future financial claims against their former spouse.
• Damage to Reputation: Beyond legal consequences, there is a risk of serious reputational damage, which can affect social and professional relationships.

As you can see, if a party is found to have deliberately concealed assets or provided false information about their financial situation during divorce proceedings, they can face significant penalties.

What to do if my spouse is hiding assets during divorce?

If you suspect your spouse is disposing or hiding assets before divorce, you could consider engaging a forensic accountant or financial investigator who specialises in uncovering hidden assets. This option can be costly and is often used as more of a last resort.

Another option could be consulting with a divorce lawyer who can provide legal strategies and options, such as seeking court orders to prevent further hiding or transfer of assets.

Family solicitors can help you file for court orders that require full financial disclosure, or freeze assets if there’s an immediate risk of dissipation.

Your solicitor can help you apply for other court orders such as a disclosure order against third parties (e.g., banks or companies) to release financial information about your husband.

You should keep a record of all financial statements and any suspicious activity. This includes bank statements, investment accounts, and large transactions. Continue monitoring joint accounts and watch for unusual financial behaviours, like setting up new accounts or suddenly selling valuable items.

Which assets do spouses typically try to hide?

There is a wide range of assets that spouses may try to hide during a divorce, including:

• Savings – occasionally there will be a separate individual savings account that is kept secret from the other spouse.
• Shares – if one spouse owns shares in their own name, they will sometimes transfer shares to a family member to try and avoid the value of these from being added to the matrimonial pot.
• High-value items – expensive jewellery, antiques or gold might be purchased to reduce accessible cash. Occasionally a spouse may claim to be holding these for a third party.
• Business assets – if one spouse owns a business, such as a limited company, the majority of their wealth may lie in their company. Sometimes they will try and hide these business assets or undervalue the business when filling out the divorce papers. How are business assets divided in a divorce?
• Bonuses – the majority of the payment in some jobs comes in the form of significant annual bonuses. Some spouses may try and defer bonus payments in an effort to reduce their assets for purposes of divorce. They will then collect these bonuses after the decree absolute has been issued.
• Cryptocurrency – increasingly wealth is being hidden in cryptocurrencies such as Bitcoin. The nature of cryptocurrency means that it can be impossible even for a court to gain access to it.

Why do some spouses try to hide assets in a divorce?

Spouses may feel compelled to conceal assets or transfer money away from accounts during a divorce for several reasons:

1. Perceived Injustice: Some may feel that the law’s division of assets does not fairly represent their contribution to the marriage’s finances and, therefore, seek to protect what they consider rightfully theirs.
2. Spite or Revenge: Divorce can be emotionally charged, and the desire to hurt the other party or gain an upper hand in proceedings can drive individuals to hide assets.
3. Fear of Financial Insecurity: The prospect of dividing assets can be daunting, and some spouses might conceal wealth out of fear of not having enough post-divorce.
4. Lack of Trust: If there is a breakdown in trust, one spouse might hide assets because they believe the other will squander their shared wealth or not use it in the best interest of any children involved.
5. To Avoid Debt Responsibility: If one spouse has accumulated significant debts, they might hide assets to avoid using them to pay off these liabilities.

You often hear about parties concealing assets before divorce when they assume the court will award the other party a 70/30 asset split, which is very uncommon and unlikely.

Is it illegal to hide assets in a divorce?

It is illegal to intentionally hide assets during a divorce.

There is a duty on each spouse to make a full and frank disclosure of their financial position, which includes the full extent of their assets.

If either divorcing party deliberately fails to divulge the existence of assets during the divorce procedure, this can potentially be considered contempt of court, leading to fines and even imprisonment.

What are some common red flags of fraud or hidden assets?

The things to look out for in terms of hidden assets during divorce include:

• Transfer of assets – if money, shares, or other assets are transferred by a spouse to their family members shortly before divorce, this might indicate they are trying to avoid them from being added to the matrimonial pot.
• Online accounts – if the login details to any shared internet accounts are changed, such as a new banking password, this can be a sign that they are making significant withdrawals that they want to keep secret.
• Post – if regular mail from personal or business bank accounts stops arriving, this can be a red flag.
• Spending habits – if there is unusual spending activity, this may indicate that money is being transferred to keep it out of the financial settlement.
• Delays – sometimes one spouse might try and put off divorce proceedings, with a view to allowing themselves enough time to dispose of certain assets.

Financial Consent Order Services

Hopefully, from reading this article, you’ve understood that whilst you can hide assets in a divorce, there are consequences involved with doing so.

We recommend that every couple who gets a divorce through our services also obtains a financial order so that both parties can have a financial clean break and move on knowing that no future claims can be made against each other.

Without obtaining a financial consent order you will still be financially tied to your ex-spouse after your divorce.

View our online consent order services from £399 – Saving you thousands in legal fees.