Divorce can involve a lot of different things, but the financial ramifications should not be dismissed. Both parties are expected to disclose facts about their debts, savings, assets, income, and more as part of the divorce process. Read on to find out why that disclosure is so important and what could happen when parties try to hide things from the court.
Why is Full Financial Disclosure So Important?
Divorce can mean dividing up assets and debts according to the divorce laws of the state. That could mean a 50/50 split if the divorcing parties live in a community property state or a more equitable split if the parties live in an equitable distribution state. No matter how things are split, if one of the parties withhold financial information, then the other party could be at an extreme disadvantage, and it could even negatively affect the children of the marriage.
For example, child support is based on the income of the parent who has legal but not physical custody of the child. If the paying parent hides income, such as those whose income is derived mostly from cash operations, the child support payment ordered could be based on incorrect information. This type of harm to an innocent child is taken very seriously by the court, which brings up the potential ramifications of hiding assets during divorce.
What Might Happen When Divorcing Parties Are Not Honest?
Not only is child support based on full financial disclosures, but spousal support, debts, and property splits are based on it. One of the first things divorcing couples do is submit forms to the court listing assets and other financial matters. Once received by the court, any dishonest information on the form is considered lying to the courts, and that might be also be called perjury or contempt of court. Egregious and intentional misrepresentations of the financial facts might lead to criminal charges. Even innocent mistakes can result in negative consequences for the party.
For example, if one party accidentally forgot to disclose their boat ownership because it was in the shop for repairs, the judge has the power to award that asset to the other spouse. In most cases, the judge will warn the party about the consequences and move on if the mistake appears unintentional, however.
If you suspect your spouse is being less than forthright with assets or other financial facts, speak to your divorce attorney about what can be done. The judge can order your spouse to submit financial documentation proving their disclosures. Talk to your divorce attorney to find out more.