Missing Assets in Divorce
An issue that arises with some frequency in divorce cases involves allegations that a spouse has hidden or disposed of marital assets. Often, these are assets, such as jewelry, cash, or valuable coin collections, which neither party admits taking or having in their possession following the marital separation. Transferring or depositing funds into undisclosed financial accounts and/or taking cash withdrawals in advance of the separation is another ploy that a spouse may use to attempt to hide or conceal assets from the other spouse.
Under North Carolina law, both parties to an equitable distribution action are required to make a full disclosure of all assets and debts known to them to exist as of the date of separation, including both their marital and separate property interests. When there are disagreements between the parties as to whether a marital asset was owned by the parties on the date of separation, or which party is in possession of an asset, the party claiming that such asset existed on the date of separation has the burden of convincing the court of its existence, as well as providing some evidence of value. If a party fails to do so, a judge may refuse to value and distribute the asset as part of the marital estate. Receipts, credit card and bank statements, photographs, personal property appraisals and insurance schedules can be helpful in establishing the existence of an asset as well as the purchase price or replacement value of certain assets such as jewelry or coins. It is much harder to establish the existence and value of cash that the parties owned at date of separation because there is usually little or no evidence other than the testimony of the parties. In many situations where there are disputes over which party is in possession of an asset or whether an asset existed at date of separation, a judge must rely on oral testimony and determine which party is most credible.
When a legal action is pending, your attorney can use a formal legal process known as “discovery” to require your spouse to provide information and produce documentation regarding assets and debts. Discovery is a valuable tool attorneys use because the court has authority to require a party to comply with discovery requests. Your attorney may also be able to issue a subpoena to a third-party to appear for a deposition or produce certain documents. Additionally, your attorney may recommend that you retain a forensic accountant to review and analyze financial records and other documents to uncover hidden assets.
A party’s actions in attempting to hide, conceal, waste, or transfer assets can be very damaging to his/her equitable distribution case. There is always a good chance the offending party will be exposed and, these actions can undermine his/her overall credibility and result in adverse economic consequences. One of the most common results is that the judge will award an unequal division of the marital property in favor of the other party. However, depending on the totality of the circumstances, the offending party could face sanctions in the form of fines or penalties, or even have criminal charges brought against them if they have knowingly lied under oath. If you have concerns that your spouse is attempting to conceal, waste, dispose, or transfer assets without your consent, it is imperative that you notify your attorney immediately. Your attorney can file a motion and seek an emergency injunction to prevent your spouse from legally taking such actions.
The family law attorneys at GHMA | LAW are dedicated to providing strategic and effective legal representation to clients throughout Western North Carolina in a wide array of family related matters, including equitable distribution. They are committed to protecting your financial interests and can assist you in uncovering undisclosed assets or accounting for missing assets to ensure that your marital estate is fairly divided and you receive your share of what is rightfully yours.
This article is for information purposes only and is not to be considered or substituted as legal advice. The information in this article is based on North Carolina state laws in effect at the time of posting.