Being honest about assets is key to reaching a fair divorce

This article looks at why financial disclosure is important in divorce and what to do about hidden assets.

As the Financial Post notes, most people go into divorce underestimating just how dramatic the financial implications of ending their marriage will be. One of the first things that has to be done by both spouses when they have decided to divorce is to fill out a financial statement that lists their assets, income, and expenses. It is extremely important for each spouse to be honest about their financial situation so that a fair divorce settlement can be reached. Unfortunately, in some cases one spouse may try to conceal assets from the other spouse. In those instances, it is important to know what to do and how to uncover the hidden assets.

Why honesty matters in divorce

Disclosing one's assets is not something to be taken lightly during a divorce. That's because in most cases marital property is divided 50/50 between both spouses and the higher-earning spouse typically pays support to the lower-earning spouse for a period of time. However, if one spouse tries to conceal assets or make their financial situation appear worse than it actually is then the other spouse will likely end up receiving less than what she or he deserves.

Furthermore, concealing assets is a form of fraud and, if found out, can result in charges being laid against the offending spouse. Of course, judges also take a grim view of anybody who tries to mislead them and if they find that one spouse has been deceptive about his or her finances then that spouse can expect to receive a worse deal than may have been the case if they had been upfront about their situation from the beginning.

Spotting hidden assets

The problem is that hidden assets can be difficult and costly to uncover. That's because in many cases it will be necessary to hire a forensic accountant to track down the assets and even then there is no guarantee that the accountant will turn up any incriminating evidence. That's why it is important to have more than just a hunch that the other spouse is hiding assets.

As the Globe and Mail points out, there are some signs that people going through a divorce should look out for if they suspect assets are being concealed by the other spouse. If the other spouse is a business owner, for example, then an unexplained drop in expenses along with a drop in income could be one clue. Another common tactic is for one spouse to buy art, collectibles, or other items that may either be hard to value or easily "gifted" to a friend or relative until after the divorce is completed.

Help during divorce

It is important not to underestimate the upheaval a divorce can cause in one's life, especially when it comes to finances. That is why it is important to talk to a lawyer who can help clients protect their best interests when negotiating a divorce settlement. By ensuring their client is treated fairly, a lawyer can help that client feel better prepared to start anew with their post-divorce life.