How To Spot a Spouse Hiding Assets in an Arizona Divorce

There are several reasons that divorce is considered one of the most stressful experiences in life, and one of the main ones is finances. In an Arizona divorce, assets (and debts) are split based on the principles of community property. Some couples are unaware of this when they first begin the divorce process and are shocked to learn what their ex will be entitled to in property division. This, unfortunately, could result in an instinct to hide away assets so they can’t be split in accordance with Arizona law. If your spouse succeeds in hiding assets during your divorce, you could be left with less than your fair share of the marital estate. Don’t let yourself become a victim of the divorce process. For your free consultation with one of our perceptive, aggressive Phoenix family law lawyers, call 480-448-9800.

Arizona Community Property and Property Division

Many clients come to us for divorce with major misunderstandings about how marital property is split in Arizona. Just because a credit card, personal loan, or other debt is only taken out in one spouse’s name doesn’t mean it is separate property debt. Almost everything accrued during a marriage- assets, and debts- are considered community property to be divided evenly in divorce. Separate property can only be acquired before or after a marriage, or during marriage by devise or descent.

Just because an asset starts out as separate property doesn’t mean that it will remain that way forever. One way that separate property can become partially or wholly community property is through commingling. Commingling occurs when there are community property contributions to separate property. For example, a man buys a house and has almost paid off the mortgage when he gets married. After the wedding, they eventually install a casita and renovate the bathroom. They live in the house for years and one of the spouses eventually files for divorce. While a majority share of the home’s value would likely be the husband’s separate property, any mortgage payments made after the wedding and the increase in value due to the improvements made after the wedding are both community property. This share would be split between the couple during the property division.

Bypassing Community Property with an Out of Court Agreement

Not every divorce case has to go before a judge. The spouses are free to agree to any manner of property division they want out of court, even if it doesn’t reflect community property values. This can be done before the marriage with a prenuptial agreement, or before the divorce with a postnuptial agreement. Otherwise, the divorcing spouses can come to an agreement that is finalized through the court with a consent decree. Because Arizona is one of three states that has covenant marriage, it should be noted that spouses in a covenant marriage can’t use a consent decree to divorce. Additionally, spouses that use a consent decree to decide divorce issues are still subject to the mandatory 60-day waiting period for Arizona divorces.

Out-of-court agreements give spouses the chance to prioritize the assets they truly value in negotiations, rather than risk having to sell them to split them down the middle. When a divorce goes to court, the spouses cede control over final decisions to the judge. Selling assets rather than determining a fairer way to split them could be the more rational decision, in the judge’s eyes. Additionally, divorce settlement agreements allow spouses to keep their matters more private than public divorce proceedings. Overall, the trial is expensive and can be nasty and stressful. We always try to negotiate favorable divorce settlements for our clients before utilizing our courtroom experience as a last resort.

Examples of Hiding Assets

Hiding assets isn’t always as simple as someone hiding cash in their sock drawer or in a hole in the backyard. Hiding assets can be done in several ways, including but not limited to:

• Presenting income statements with falsely reduced numbers, especially if the spouse is self-employed or owns their own business
• Transferring funds or assets to a friend or family member to hold onto until the divorce is finalized
• Overstating debts to create the appearance of a worse debt-to-income ratio
• Keeping a secret bank account to deposit income (community property funds) during the marriage
• Failing to disclose assets the spouse falsely believes to be separate property
• How to Tell if Your Spouse is Hiding Assets

Most people enter a marriage with the idea that their spouse could never do anything to hurt them and usually hope that their spouse will always be fully honest. But a 2018 study conducted by the National Endowment for Financial Education found that out of people who have ever combined finances with a partner, 2 in 5 listed a deception while doing so. That may not exactly mean that there is a 40% chance that your spouse is hiding income, but you should still be aware that it could be a potential issue.

If you believe your spouse is hiding assets, representing yourself in divorce will be highly complex- you should probably consider retaining an attorney. You may also need to hire a forensic accountant to properly assess your marital estate. This is especially true in marriages of long duration, or marriages in which the spouses hold complex property interests. You may need intervention from the court if you find evidence that your spouse has been hiding assets.

Is There a Good Way To Hide Assets in a Divorce?

The way that community property divides your marital estate may not seem fair to you. But hiding, or attempting to hide, assets isn’t a good solution to this problem. Depending on the circumstances, this could be considered fraud or perjury. These offenses could cause you to be fined, sanctioned by the court, and even sent to jail. You should be honest when creating an itemized list of all the assets you own, including property and bank accounts. Your divorce attorney can help you identify which, if any, of these assets are your separate property and exempt from property division. But hiding assets, whether intentionally or accidentally, could have serious consequences in a divorce. Try to identify legal strategies to protect assets with your Glendale family law lawyer that won’t lead to prosecution.

Arizona Divorce Lawyers Who Work Hard To Protect Your Financial Interests

When you’re in the midst of a divorce, it can feel like the whole world is against you. You could have been served divorce papers in an embarrassing way, and now have to deal with court deadlines and negotiations from your ex’s lawyer. If you have children with your spouse, they’re probably distressed from the conflict as well. On top of all of this, your ex may be coming for everything you own and then some. A divorce lawyer will work as your advocate during a divorce from issues ranging from property division and spousal maintenance to child custody and child support. AZ Family Law Lawyers strives to offer high-level legal services with low-level pricing. That means affordable down payments and monthly payment plans that you can afford. You can learn more about the process risk-free with your initial consultation. Schedule your free consultation by calling our office at 480-448-9800 today.