It would be terrific if all divorcing couples in San Diego and throughout California were open and honest about their marital finances, namely, the assets to be allocated between the spouses. Because California is a "community property" state, all marital property, debts and assets alike, should be divided equally. But estranged spouses have been known to conceal or otherwise channel marital funds into unknown repositories, in order to avoid sharing the accrued marriage wealth. If you are contemplating divorce, it is imperative that you contact a local attorney with a great deal of experience assisting clients in securing the optimal divorce settlement.
A recent Bloomberg article recounts the many ways that business owners seek to hide money, in an effort to save on paying taxes. If and when this business owner -- and his or her spouse -- decide to divorce, the owner often continues this fraud to try to "shortchange" the estranged spouse when it comes time to divide the assets. In effect, the hidden money reduces the value of the business, which is, in all likelihood, part of the marital property to be split evenly.
Spouses who are not involved in business matters are, nonetheless, typically in a unique position to know the true value of a business. After all, even though a certain number is reported as the business owner's official salary, their lifestyle and other expenses may reveal that much more money is earned than is reported. One reporter indicated that many professionals find ways to "hide" income by either understating revenue or inflating their business expenses. In divorce proceedings, many businesses coincidentally see their profits drop drastically right around the time that the married couple decides to separate. It is suggested that judges have seen this occur time and time again.
There are many other ways that a spouse may attempt to hide property during a divorce: 1) delaying raises, stock options or bonuses until after a divorce is finalized; 2) waiting until after a divorce is finalized to sign lucrative financial, business or other contracts; 3) paying a friend, relative or business partner for services not rendered; 4) skimming cash from a business or personal account; 5) hiding valuable assets, such as artwork, antiques, or hobby collections; and 6) hiding investments or cash.
Despite a spouse/business owner's attempts to hide assets from an estranged spouse, there will usually be warning signs, such as a rich lifestyle, including expensive dinners and costly social engagements.
Identification of property is critical in a divorce case. Determining what is considered a marital asset, and identifying all assets to be considered, can have a dramatic impact on your case. It is also important to be aware that one spouse may attempt to empty a joint bank account or run up huge cash advances or credit card debt in preparation for a divorce.
Unfortunately, divorce has the potential to bring out the worst in people. The best course of action is to have an experienced attorney on your side to help vigorously protect your share of the marital assets, in an effort to achieve a fair settlement.
Thomas Huguenor, a divorce attorney certified in family law by the State Bar of California’s Board of Legal Specialization, has 35 years of experience guiding the people of San Diego through the family law process. If you have questions concerning the identification of property, contact us either online or at (858) 458-9500 for a free and confidential consultation.
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