When a marriage ends in California, the law says that the assets acquired by the couple during the marriage are to be split 50/50. This equal division may not sit too well with a spouse who feels they are entitled to a greater share of the community property.
Parties to a divorce must legally disclose all information about assets in which they have an ownership interest. If one party fails to comply with the duty of full disclosure, several penalties may be imposed on the offender depending on the nature and extent of the deception.
What Assets Must be Disclosed in a California Divorce?
Each party to the divorce is required to complete several declaration forms that disclose information such as community property, separate property, income, and expenses. Each is also required to submit recent documentation in support of declared assets and liabilities.
Community property includes all money earned and debt incurred by either spouse during the marriage and property purchased with community funds. Separate property includes money earned and property owned before marriage, property purchased with separate funds, value generated from separate property, and gifts or inheritances received during the marriage.
Under penalty of perjury, each party is required to execute and serve on the other a final declaration of disclosure and a current income and expense declaration that must include:
- All material facts and information regarding the character of assets and liabilities
- All material facts and information regarding the value of community property
- All material facts and information concerning the amount of community debt
- All material facts and information about each party’s income, expenses, and accumulations
Ways a Spouse May Attempt to Hide Marital Assets
Divorce is not the only time partners may attempt to deceive each other regarding finances. A recent study by the National Endowment for Financial Education (NEFE) found that 43% of US adults who have combined finances in a relationship have committed some act of financial deception – such as lying about purchases or hiding money.
When divorcing, spouses may employ several strategies to try and keep more of the marital assets for themselves.
- Underreporting income
- Overstating debts
- Establishing secret bank/investment accounts
- Giving property to friends or family to safe keep until after the divorce
- Use legal strategies to disguise property ownership
- Stockpiling cash
Legal Penalties in California for Hiding Assets in Divorce
A spouse who fails to fully and accurately disclose financial information can face civil and criminal penalties.
If a party fails to comply with the disclosure requirements, the court will impose monetary sanctions against the non-complying party. The sanctions are to be in an amount “sufficient to deter repetition of the conduct” and are to include attorney’s fees and costs.
If one spouse does something to impair the other spouse’s interest in community property, the wronged spouse has a claim for breach of fiduciary duty against the offending spouse. Remedies can include an award of up to 100% of the value of the asset(s) in question, plus attorney’s fees and court costs.
Failure to fully disclose assets and liabilities can lead to criminal charges of perjury and fraud. Perjury is punishable by up to 4 years in jail. Fraud penalties can include time in jail, if less serious, and even prison time for felony fraud. Offenders can also be fined up to $10,000 – sometimes more.
If you are going through a divorce in California and suspect your spouse may be hiding assets, consult an experienced Sherman Oaks divorce attorney who can help you compile all the necessary financial information and identify suspicious circumstances that should be investigated.