Hidden Assets 

Marriage can be especially stressful when the issue causing tension between the spouses is money. In fact, in a recent 2024 Forbes article and survey on divorce, financial issues were included in the top three leading causes of divorce, with 38% of couples offering finances as the reason for ending their marriage

Financial issues in the marriage often carry over to the divorce when the court is charged with equitably dividing the parties’ marital property or reconciling issues of alimony or child support. Resolving these issues is more difficult when one of the parties has hidden assets that he or she fails to disclose. Not only does hiding assets make it difficult for the court to provide financial equity between the parties in their divorce, but it may also lead to unwanted legal consequences for the party hiding the assets. 

What Are Hidden Assets?

What Are Hidden Assets?

In every divorce proceeding involving the division of property in South Carolina, the court must equitably (fairly) divide the parties’ marital property. As part of that process, each spouse is required to fully and fairly disclose to the other spouse all of the assets they own or in which they hold an interest at the time of the divorce. This could include both “marital” and “separate” property.   

Generally, “marital property” is any property that either spouse acquired during the marriage, such as income, a car, a stock interest, or a gold watch, for example. Marital property also includes a debt that is incurred during the marriage, such as a loan or a credit card balance. If the property is “marital,” then both spouses have a financial interest in the value of that property in the divorce. 

“Separate property” is any property that one of the spouses owned prior to the marriage or acquired after the marriage. Parties generally retain their own separate property upon divorce and do not retain a financial interest in the other spouse’s separate property.

A “hidden asset” is any asset relevant to the distribution of property in the divorce (usually marital property) that one spouse fails to disclose to the other spouse and, thereby, deprives the other spouse of his or her equitable interest in the value of that property. For example, suppose a husband used marital income to purchase a sailboat during the marriage. In that case, the sailboat is marital property in which the wife maintains an equitable interest in the divorce. However, if the husband does not disclose to his wife that he purchased and still owns the sailboat, then the wife will be unfairly deprived of her interest in the value of the sailboat upon divorce.

How Might My Spouse Hide Assets? 

A spouse may attempt to hide assets in a divorce by simply failing to identify or disclose property to the other spouse so that it is not accounted for when the court divides the property. Alternatively, the spouse may actually move property out of their estate so that it is not accounted for as marital property to be divided in the divorce.

Here are other common methods a spouse might use to hide assets:

  • Transfer property to a friend, relative, or business;
  • Place property in trust;
  • Falsely claim that property was acquired prior to the marriage, thereby classifying the property as “separate” property;
  • Falsely undervalue an appraised asset; or
  • Literally, hide an asset so that it cannot be sold or distributed

Another common way to hide assets is by passing income and property through a business to make it appear that the spouse derives less value from their business than they really do. 

What Should I Do If I Suspect My Spouse Is Hiding Assets in Our Divorce?

In any civil cause of action, including a divorce, there is a process in the litigation for discovering relevant information from the other party. This process is called “discovery.” 

“Discovery” in divorce litigation is the process through which the parties exchange information and documents that are relevant to the divorce and the division of marital property. 

This includes any financial information or documents, such as:

  • Tax returns;
  • Pay stubs;
  • Bank statements;
  • Profit and loss statements for a business;
  • Retirement account statements;
  • Investment reports; 
  • Dividend and interest statements;  
  • Win/loss casino statements; and 
  • Loan and loan forgiveness documents.

You may use the discovery process in your divorce to determine whether your spouse is hiding assets. There are a number of discovery resources you can use to obtain information about hidden assets, including a request for admissions, interrogatories, a request for production of documents, depositions, and a motion to compel discovery. 

What Are the Consequences of Hiding Assets?

If a court discovers that a party is hiding assets, there are several possible consequences. First, the court may include the value of the hidden asset in the division of marital property so the other spouse is afforded their fair interest in the marital property. A court may also simply award the hidden asset to the other spouse.

Because participation in the discovery process is required and may be issued as a direct order of the court, hiding assets may be considered noncompliance with discovery and a direct violation of a court order. For this, the court may hold the spouse in contempt of court and require the spouse not only to turn over the hidden asset but to pay a fine or even go to jail.

A court also may order the offending spouse to pay the other spouse’s attorney’s fees that were incurred during the discovery process to uncover the hidden assets.

A Rock Hill Family Lawyer Can Help You Discover Hidden Assets 

In light of modern access to online information like bank records and tax returns, uncovering hidden assets is easier than ever before. However, many spouses will go to great lengths to protect their interests in a divorce and to deprive the other spouse of their equitable share of marital property. If your spouse is hiding, transferring, or undervaluing marital property, it can deprive you of significant financial interests in your divorce.

It is best to contact an experienced divorce attorney who can follow proper discovery procedures to uncover the hidden assets and protect your financial interests in your divorce. Call Minor Law Divorce Lawyers at (803) 504-0971 or contact us online to learn how we can help your case.