Going through a divorce means both spouses are likely to lose some property that was co-owned during the marriage. The State of Texas allows a court the discretion to divide marital property between the divorcing parties according to what the court decides is best for all involved. Divorcing spouses, however, may have other ideas about property ownership and what is best for each other.
This can lead to attempts at hiding money in a divorce so it can’t be considered by the court and shared with the ex. When one spouse suspects the other is hiding assets, there are ways to investigate and track down undisclosed assets. Below, our Brazoria County divorce attorneys discuss the penalty for hiding assets in a divorce under Texas law.
What Property Gets Divided in a Texas Divorce?
Not all of the property owned by a married couple is subject to division in divorce. Texas is a community property state, meaning each party equally owns all community property. Each party may also own property separately, and only community property needs to be divided in a divorce.
Separate property consists of:
- Property owned before the marriage
- Property acquired during the marriage by gift or inheritance
- Compensation for personal injuries (except loss of earning capacity)
The law presumes that any property possessed by either spouse is community property. A spouse claiming certain property is separate must provide sufficient proof of sole ownership. The standard of proof required to support a separate property claim must be ‘clear and convincing’.
Community Property Division Isn’t Always 50/50
Even though the law declares each spouse to own all marital property in equal shares, it doesn’t mean a court must split every asset equally or that each party will get exactly 50% of the value of all assets. The general rule of property division in a Texas divorce is that a court will divide the estate of the parties in such a way as the court considers “just and right,” while also factoring in the rights of the parties and their children.
In determining what may be just and right under the particular circumstances, a court will consider such factors as:
- Length of marriage
- Earning capability post-marriage
- Contributions made to the marriage
- Child custody and support
- Financial need
- Health and well-being
The court may consider other factors, depending on the unique circumstances of your divorce case.
A Pre- or Post-Nuptial Agreement Can Affect the Division of Marital Property
Agreements made between the parties can alter how the law would otherwise divide their property. These agreements are contracts between the parties and will control the disposition of the property described in the contract.
To be enforceable, pre- and post-nuptial agreements must be in writing and signed by both parties. One party can challenge the agreement’s enforceability if they can demonstrate how the other party took unfair advantage during negotiations. They can also challenge it if they signed under duress, the other party hid assets, or if the court determines the agreement would be unfair if enforced.
Divorcing Parties Must Disclose All Assets and Liabilities
The Texas Family Code requires each spouse to disclose all assets, liabilities, and income sources. All means everything. If one spouse claims that certain property is separate, they must provide sufficient documentation to overcome the presumption that it is actually community property. This includes liabilities, otherwise known as debts.
Spouses typically have 30 days after the divorce has been initiated to provide each other with complete written lists and supporting documentation of all known assets and liabilities.
If one party is concerned that the other may attempt to hide or waste marital assets, a temporary restraining order (TRO) may be issued by the court to protect the interests of the non-possessing spouse.
What Does Hiding Assets Look Like?
Hiding assets can look like a roll of $100 bills stuffed behind the bookcase or a six-figure stock portfolio someone just forgot to mention. It may also appear as a piece of real estate transferred into the name of a friend or family member to escape detection. In high-asset divorces, you don’t want to overlook the possibility of a bank account in the Cayman Islands.
The more money that’s involved, the more creative the attempts at deception may be. If one spouse suspects the other is failing to disclose all assets, a forensic accountant may be able to help. They can track down the hidden property by scouring financial documents, following paper trails, and identifying discrepancies and other unusual activity.
What Can Happen if You’re Caught Hiding Assets
When one spouse discovers hidden assets during a divorce, it usually results in negative consequences for the dishonest spouse. Depending on how serious the deception is in the eyes of the court, the penalties for hiding assets can include fines, jail time, and awarding the concealed assets to the misled spouse. Criminal charges may include contempt of court and perjury.
If a court determines one spouse has committed fraud against the community, it may award the wronged spouse a money judgment and as much of the community estate as is deemed just and right under the circumstances. Criminal fraud charges against the wrongdoer are also a possibility if the deception is particularly egregious.
A Texas Family Law Attorney Can Help Uncover Hidden Assets in Divorce
Despite fairly significant penalties, it is not uncommon for one spouse to attempt to hide marital assets from the other in divorce. Ideally, spouses should work with a qualified attorney to discover hidden assets and make the appropriate adjustments to property division decisions before finalizing the divorce. If one party finds evidence of hidden assets after the divorce, they have a limited time period during which they can petition the court to assume jurisdiction and divide the property.
Successfully managing the complexities of divorce proceedings is how the dedicated and compassionate family lawyers at Terry & Roberts help clients turn a difficult life experience into the beginnings of a solid future. With decades of experience handling all types of family law matters, Terry & Roberts serves Brazoria County with offices in Pearland and Angleton. Contact us today to learn more about how we can help you with your divorce.