Bedrock Divorce Advisors

To read this article directly on Forbes and/or to leave a comment, please click on this link: http://www.forbes.com/sites/jefflanders/2012/11/27/three-types-of-financial-mistakes-divorcing-women-make-and-how-to-avoid-them/

It’s a legal requirement of all divorcing couples: Each spouse must openly and honestly disclose all assets (and income, expenses and debt). Unfortunately, though, it seems some people simply can’t resist the temptation to lie or cheat in order to keep at least a portion of those assets solely to themselves.

As I’ve mentioned before, many women are surprised to learn just how commonplace it is for husbands to hide assets from their wives. These men use a wide range of dirty tricks so they can:

• Hide, understate, or undervalue certain marital property,
• Overstate debts,
• Report lower than actual income, and/or
• Report higher than actual expenses.

Ultimately, a husband who is hiding assets is hoping to keep more marital property for himself while preventing his wife from getting the fair settlement she’s entitled to.  It’s a strategy that’s misguided, underhanded, deplorable . . . and completely illegal. And yet . . .

I’ve seen estranged husbands engage in these shady behaviors time and time again. In fact, according to the National Endowment for Financial Education, about one-third (31 percent) of US adults who combined assets with a spouse or partner say they have been deceptive about money, and women are more likely than men to say their partner or spouse lied to them about finances, debt, money earned (65 percent vs. 47 percent respectively).

As the NEFE outlines in this press release, the study also found that:

• Nearly three in five of those surveyed (58 percent) said they hid cash from their partner or spouse.
• More than half (54 percent) hid a minor purchase from their partner or spouse.
• An additional 30 percent hid a statement or a bill from their partner or spouse.
• 34 percent admitted they lied about finances, debt, money earned.

But, make no mistake about it: Lying during divorce proceedings is illegal.

The rules of civil procedure ensure that when someone signs a court document he/she is agreeing that the contents of the document are true and correct to the best of his/her knowledge and belief. As I see it, that means two things:

1. When your husband signs the Financial Affidavit –which is required in every contested (and even in some uncontested) divorces –he is swearing, under penalty of perjury, he is telling the truth about his finances and disclosing all assets, liabilities, income and expenses. (For instance, he must disclose the stock options he was granted by his employer even if no one specifically asked him if he had stock options.)

2. It’s absolutely essential to have a qualified divorce team handle your case. Their professional expertise and support will help you remain on the right side of the law, even as you work to keep your finances intact and secure your financial future.  From the onset, many women find that a Lifestyle Analysis, prepared by a Divorce Financial Advisor, is enormously beneficial to identify spending habits and the day-to-day living expenses incurred during their marriage, with an emphasis on the last three to five years. This analysis includes recurring and ordinary expenses, as well as unusual and non-recurring expenses, and it’s often required by the judge as verification of the net worth and income and expense statements submitted by both spouses.

What can happen if he lies?

When someone lies under oath, he/she can face very serious consequences. Naturally, penalties vary from state to state (and from case to case), but in general terms, the law empowers the courts with a variety of different remedies for such blatant contempt of court. For instance, if your husband knowingly violates asset disclosure laws, a judge could order him to pay your attorney fees and/or fines. Or, he could be subject to a dismissal of his claims. In the most serious cases, your husband could even face incarceration.

Here’s a court case that really drives home the point. Back in 1999, a Los Angeles family court judge ruled that a woman had violated state asset disclosure laws because she neglected to reveal she had won $1.3 million in the California state lottery . . . just 11 days before she filed for divorce!

According to the Los Angeles Times, the judge in this case determined that the wife had acted out of fraud or malice, and as a result, he awarded all of the winnings to the ex-husband.

Since California is a community property state, the husband would have been entitled to receive half of the lottery fortune –if the wife had properly disclosed it. Instead, he was awarded every penny of the $1.3 million.

In another landmark case outlined at DivorceNet.com, a husband in Michigan deliberately hid assets during his divorce’s primary trial period. When assets were found after the divorce was finalized, the court reconsidered the property division and eventually awarded the wife all of the found assets.

If you suspect your husband could be guilty of hiding assets, please Think Financially, Not Emotionally®. Alert your divorce team to your concerns, so you can work together to ensure you receive an equitable divorce settlement agreement.

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Jeff is the author of the new book, Divorce: Think Financially, Not Emotionallyâ What Women Need To Know About Securing Their Financial Future Before, During, And After Divorce, which provides women going through the crisis of divorce with the tools they need to secure their financial future. What’s more, he is donating 50% of all profits to the Bedrock Divorce Fund for Abused Women, Inc., a 501(c)(3) nonprofit charity whose mission is to help female victims of domestic abuse and the organizations that support them.

All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

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