When a marriage breaks down one of the first things to go is trust. When there is mistrust in a marriage it is not uncommon for the two people to hide things like assets from each other.
This can be serious during a divorce because the Family Law Act dictates that each spouse must disclose all their assets so there can be a fair and equitable settlement.
Why would someone hide assets?
A person might hide assets for multiple reasons.
Maybe they don’t trust the law to divide the assets fairly and they believe they will have to pay more than is fair.
They might also have assets that have been amassed from illegal activities.
A person might also think that if it looks like they have less money they will be able to avoid having to pay spousal or child support.
Where would they hide assets?
A person who wants to hide money from their spouse and the law might do so in several ways.
Unfortunately, it can be as simple as enlisting a friend to open a bank account that their spouse doesn’t know about. According to legalline.ca other ways include:
- Lending money to family or friends
- Generating fake expenses
- Not disclosing income
- Not disclosing all business assets
- Making large purchases
- Secretly withdrawing money from accounts like RRSPs
- Transferring ownership of half a home to a new partner
- Transferring interest in a company to other corporate partners
What are some signs that your ex is hiding assets?
According to an article in the Huffington Post there are several telltale signs of an ex being dishonest about there assets.
If they continue living comfortably (i.e. in an expensive condo) but claim that they are only making enough money to get by, that is a red flag.
In some cases, things like a regular monthly withdrawal or one large sum that hasn’t been accounted for on a bank statement is enough to spark concern.
Other issues like a substance abuse or a gambling addiction is enough to be wary about your ex hiding money from you and the court.
If you find out they are secretly supporting another partner you may also want to do some digging to see where that money is coming from.
Are there professionals that can help?
Yes. A family lawyer may not have the expertise to catch your spouse hiding assets, but they may be able to connect you with a forensic accountant or private investigator who are well versed in knowing where to look for hiding money.
That being said, hiring more professionals is expensive and you want to make sure you aren’t paying $10,000 to find $1000 of hidden cash.
What are the consequences of hiding assets in divorce proceedings?
Hiding assets from and ex and the court is illegal and therefore can have serious consequences.
According to legalline.ca a judge can force the guilty party to pay fines or give their ex the total amount of the hidden assets.
When it comes to large sums of money being drained from a bank account, RRSP or other investment without the knowledge of the other spouse, a judge can even sentence the guilty party to imprisonment. This is especially true if it involves a spouse who is not making court-ordered spousal or child support payments.
Finally, if the guilty party has lied or sworn false documents in court during the divorce proceedings, they can be charged with committing the criminal offense of fraud. The person may be sentenced to pay restitution to their spouse, a fine to the court, and/or imprisonment. They will also have a criminal record.