During a divorce, it is a legal requirement that each spouse disclose information about his or her financial situation. This includes detailed information about property, income, expenses and debt. However, some people are dishonest in their financial reporting. Sometimes a spouse will attempt to hide assets from his or her partner, and this can happen for several reasons. Often, a spouse does this to avoid having to share those assets with the other party in the divorce. Other times, a spouse may not want to report all of his or her income so that he or she will have to pay less in spousal support (alimony) or child support. Hiding assets during a divorce is against the law and can result in serious penalties.
Some common ways that spouses hide assets include:
- Hiding, or undervaluing marital property;
- Overstating debts;
- Underreporting income; and
- Reporting higher than actual expenses.
According to the National Endowment for Financial Education, approximately a third of US adults who combined assets with a spouse admit to being deceptive about money. The penalties for doing so can be strict. For example, in one famous incident, a woman won $1.3 million in a lottery before filing for divorce. She did not report this income and attempted to hide it. When the judge preceding over the divorce case found out, he awarded the entire $1.3 million to the husband....