Penalty For Hiding Assets In Divorce
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There is a penalty for hiding assets in divorce as it is illegal.
The family court can penalise either divorcing party if they have transferred large sums of money or other high-value assets shortly before the divorce with the intention of reducing the overall matrimonial pot, thereby depriving their spouse of a fair share of assets.
More generally, if either husband or wife tries to hide the existence of any of their own assets, this will be considered contempt of court and can lead to serious repercussions.
Why do some spouses try to hide assets in a divorce?
Both joint and individual assets are on the table when it comes to working out a financial settlement during divorce negotiations.
If there is a significant disparity in wealth or income, the spouse in a stronger financial position will sometimes feel it is unfair to share their assets when the relationship comes to an end.
In this scenario, they might decide to hide money or dispose of other assets shortly before the divorce procedure, potentially with a view to preventing what they believe is rightfully theirs from being added to the matrimonial pot when dividing assets in a divorce.
Which assets do spouses typically try to hide?
There is a wide range of assets that spouses may try and 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 in an effort 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.
Are Personal Savings Classed as Assets in Divorce?
All personal savings must be disclosed if negotiating a financial settlement when you divorce. These personal savings will usually have been built up within the marriage classing them as a matrimonial asset, even when held in one name only.
For more details about when your spouse may be entitled to half of your personal savings you may want to read: Are Personal Savings Classed as Assets in Divorce?
Is it illegal to hide assets in a divorce?
It is illegal to intentionally hide assets from the court 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.
Implications of hiding assets in a divorce settlement
Other than the potential criminal penalties of deliberate failure to disclose assets, a family court has the power to issue civil penalties.
For example, it can reduce the share of the matrimonial pot available to the dishonest spouse.
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.
What can I do if I believe my spouse is hiding assets?
If either divorcing party suspects their spouse is hiding assets, they should discuss this with their solicitor immediately, so that the court can intervene if necessary.
It has the power to impose a freezing order on assets, to prevent transfers of money from taking place, if this is being done with the intention of reducing the financial settlement.
Financial Consent Order Services
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.