Consequences of hiding Assets in a divorce

The problem to date, which especially affects women, is that a spouse going through a divorce might know that their partner has a lot of money stashed somewhere, but they can’t prove it without hiring expensive detectives, accountants, and lawyers.

Divorces can be hard and complicated, but one thing you should not do, is hiding your assets when you are going through a divorce. A legal requirement for divorcing couples is disclosing all assets they have, which includes debt, income, and expenses.

When one partner has more than the other (depending on which marital regime you are married in), it may be tempting to cheat or lie to keep their assets to themselves. Although it is illegal to hide assets in a divorce, some people still do it, especially if they are the higher income earner.

When couples are divorcing, they hide their assets for many reasons, but the main reason is usually not having to share most of their money with their divorcing partner. These people often use a variety of malicious tactics to lie, including undervaluing, hiding, or understating marital property. They might also overstate debts or report a lower income than they get.

So, when parties sign their Financial Disclosure Forms (which has recently become mandatory in maintenance applications) required in every contested and some uncontested divorce cases, they are swearing that they are telling the truth about all their finances. This includes all debts, income, assets, expenses, liabilities and more.

Because lying about one’s assets in a divorce case is illegal, it is essential to hire a skilled divorce lawyer to handle the case. Having someone with professional expertise will help a divorcing person stay on the right side of the law and will still have your financial future in their best interests. Rudolf Buys And Associates Attorneys will ensure that you’re not only telling the truth about your assets but that your ex-spouse is doing the same so that the divorce settlement is as fair as possible.

What Happens If You Lie About Assets in A Divorce?

If a party lies under oath, they can be prosecuted for perjury. Although penalties for hiding assets in a divorce will vary, you will still be in blatant contempt of the court no matter where your divorce is finalized.

If a judge finds out that someone is knowingly violating asset/financial disclosure laws, then the judge might make them pay for their ex-spouse’s attorney fees and costs. Or the judge will dismiss all the lying party’s claims. For more serious cases, jail time can be given to the person hiding assets in a divorce case. The judge might also make you pay additional penalties and provide your ex-spouse with a larger distribution in the divorce settlement (or even the entire amount), instead of splitting it if you were honest from the start.

How to Uncover Hidden Assets?

There are different things a person can do to try and uncover the truth about hidden assets their ex-spouse might be hiding. You can employ a forensic accountant, who is a financial expert and will look at all the family’s finances to see if there is money being hidden. They will be able to help figure out if there are secret accounts or if expenses are more than the income your ex-spouse claims to bring home.

During a divorce, the court will allow divorcing spouses to seek out certain information during the discovery phase of the case. The object of discovery is to ensure that before trial both parties are made aware of all the documentary evidence that is available. Discovery requires the opponent to specify on oath the documentation in its possession or under its control which relate to the action. Discovery in the High Court also requires one to specify which documents were in one's possession or control, but which are no longer so.

In some cases, you might not find out about hidden assets until after the divorce is finalized. You may learn later that your ex-spouse earns more than he claimed during the divorce process, sold a property they had during your marriage or more. If this happens, you can still go to court and have a fair settlement.

In a recent High Court case, Judges Motsamai Makume, Jody Kollapen and Lebogang Modiba approved a 20-page financial declaration form that can be filled in on request by the parties to a divorce. It asks for a lot more than pay slips, bank statements and tax returns. Those getting divorced will have to declare, under oath, every cent of their assets, employment benefits, interests in trusts and companies, as well as immovable assets, such as paintings, jewelry, and vehicles. Even the meal, travel and accommodation allowances from their employer have to be filled out.

Although the judgment is binding only in the high courts, magistrates’ courts, and maintenance courts in Gauteng, it will have strong persuasive authority in any other courts should anybody choose to rely on it.

The court was asked to give clarity on rule 43 applications, which is when one party in a divorce asks for a contribution to their legal costs or for maintenance for themselves or their minor children during the course of the divorce.

Legal experts revealed that the effect of the new practice would extend beyond maintenance because the assets of the respective parties would be placed on record immediately for the purposes of division, where applicable.

In a separate judgment, the high court ordered a wealthy man from Johannesburg to contribute R8.3 million to his ex-wife’s legal costs. This was on top of her monthly maintenance of R106 000.

The woman alleged her ex was “exceptionally wealthy” and tended to hide his assets in companies registered in Panama. The directors would be based in Lichtenstein and Switzerland.

The full bench of judges said that courts hearing these kinds of applications could decide whether it would be appropriate to make an order that one or both make a full financial declaration. The judge can then ascertain the true assets and liabilities of the parties.