Concealing assets is an art form. It takes creativity, deviousness, and a willingness to push the envelope and risk the consequences of the fraud being discovered. The more complex a couple’s finances and portfolio, the easier it can actually be to keep assets hidden. A spouse determined to conceal assets and property can make them virtually invisible to the untrained eye. But a skilled divorce lawyer will know what to look for and know how to uncover hidden or undervalued assets that their client rightly has an interest in. Working with investigators, forensic accountants, and other trained professionals, an aggressive divorce attorney will expose these attempts to game the system and ensure that their client’s rights are protected.
Full Financial Disclosure Required
One of the very first things that happens once a Colorado divorce proceeding begins is that each party must provide the court and the other spouse with a “full disclosure of all material assets and liabilities.” Colorado law specifies exactly what documentation and information must be provided, including:
- A “Sworn Financial Affidavit”
- The last three years of tax returns (business and personal)
- Personal financial statements from the past three years
- Business financial statements from the past three years
- Real estate documentation
- Investment account statements
- Retirement account statements
- Employment benefit statements
- Bank statements Income documentation
- Insurance documentation
This information must be provided regardless of whether it is requested by the other spouse, and the failure to provide a full, complete, and truthful accounting as required can subject a party to significant court sanctions.
How Can Marital Assets Be Concealed? Let Me Count the Ways.
Even with these mandatory financial disclosures, there are any number ways a determined spouse can hide their assets in an effort to keep them from being included in the division of marital property and the calculation of support and maintenance. Seven of the more common ways that a spouse will try to hide their true financial condition include:
- transferring money from a joint account to an individual one;
- putting assets into a family trust, offshore corporation or shell corporation;
- purchasing art, collectibles or other items that retain value but are not liquid;
- purchasing insurance policies, cashier’s checks and savings bonds.
- colluding with an employer to delay bonuses, stock options, or raises until a time when the asset or income would be considered separate property.
- Skimming or diverting funds from a business
- Failing to report income on tax returns
Don’t Rely on Disclosures Alone
Once your attorney receives the required financial disclosures from your spouse, he or she should not and will not take the information in those disclosures at face value. They will continue to investigate the veracity of that information to ensure that it accurately reflects your spouse’s true financial picture. If hidden assets are discovered, the deceit will be brought to the court’s attention, the hidden assets will be included in the allocations made in your divorce, and your spouse will be subject to penalties which can include paying some of your attorneys’ fees.
If your spouse is concealing assets, they may think that once the final divorce decree has been entered that they are in the clear. They would be wrong. Colorado law provides that if the mandatory financial disclosure “contains misstatements or omissions, the court shall retain jurisdiction after the entry of a final decree or judgment for a period of 5 years to allocate material assets or liabilities, the omission or non-disclosure of which materially affects the division of assets and liabilities.” This means that fraud or concealed assets discovered after the divorce is concluded can still be brought to the court’s attention and be used to modify your divorce decree to reflect your spouse’s true financial situation.
Trust is hard to come by in a divorce, and the truth can be even harder to find. Make sure that you have a Colorado divorce attorney who has the experience, resources, and determination to uncover even the most sophisticated schemes that can be used to deprive you and your children of assets that are rightfully theirs.