In theory, Texas state law grants both spouses a right to a fair share of their marital estate. Community property laws generally render all income earned and assets acquired during the marriage the joint property of both spouses. If spouses cannot reach a mutual agreement and need to litigate their divorce, a judge will divide their property. There could be a 50/50 split, or a judge could deviate from that standard in the name of fairness.
However, it can be a real challenge to actually determine what would be a fair solution for the division of community property. Spouses may disagree about the factors that should influence the decision, and sometimes they may even try to manipulate court proceedings.
One spouse hiding assets from the other is a prime example of manipulative tactics. This is a somewhat rare but consequential practice that involves actively hiding or underreporting personal holdings to avoid sharing them during a divorce. These are some of the ways that hidden assets can potentially affect the outcome of a couple’s divorce.
They disadvantage one spouse
The unfortunate truth about hidden assets is that they can alter the outcome of negotiations or mediation between spouses. One spouse might agree to accept a very unfavorable property division settlement because they don’t understand the true scope of their marital estate.
A court order could also end up unfairly imbalanced if someone lies to the courts about what assets they have or the fair market value of their holdings. Those who don’t uncover the warning signs of hidden assets may end up struggling more than they should to rebuild financially after a divorce.
They can result in a penalty
When either spouse notices warning signs that the other may have failed to report certain property or misrepresented the value of their assets, they may take extra steps to evaluate financial records. Those that uncover evidence of hidden assets and financial misrepresentation could potentially leverage that misconduct in court.
Typically, misconduct doesn’t influence property division in any significant way, but intentionally hiding assets does often trigger a penalty. The courts may alter how they divide the resources that belong to the spouses as a way of punishing the spouse that hid assets from the other spouse and the courts.
Understanding the unique challenges that may arise during high-asset divorces can help people more effectively prepare for divorce negotiations and court hearings with the assistance of a legal professional.