When couples are going through a divorce, one important part of the process is making financial disclosures. This is especially true if the court is going to be involved in property division. The court needs a full disclosure of all of the assets and debts that the couple holds so that it can determine how these should be divided.
One potential red flag to watch out for is any sudden financial transactions, either immediately prior to the divorce filing or in the weeks leading up to that filing. This could indicate that one person is attempting to hide assets from the court.
Creating fake debt
For example, one common tactic for hiding assets is to create fake debt, often involving another extended family member.
Say that one spouse files for divorce, and the other spouse is unhappy about that decision. They transfer a significant amount of financial assets to their parents. They claim that they are just paying off a loan that their parents gave them when they were in college, which they had forgotten about but were still obligated to repay.
In reality, they may simply be transferring those financial assets to their parents so that they can keep them out of the financial disclosure. They are claiming that they do not actually own those assets, so they do not need to go through property division.
But once the divorce has been finalized, that person’s parents may simply give them the money back, because there never was an outstanding debt. The parents were just holding those financial assets for their child, preventing their ex from getting their fair share during property division.
This is just one of the potential ways that people hide assets, and it demonstrates some of the red flags to look out for. In complicated situations like this, it is absolutely crucial that people know what legal options they have to protect their rights and help ensure that the divorce process goes smoothly and fairly.