Divorce With Respect

The strong California precedent on hidden assets during divorce

On Behalf of | Jun 16, 2023 | Division Of Assets |

Couples in California often struggle to handle their assets appropriately when they decide to divorce. Although some couples have marital agreements that clarify who keeps what, most couples must settle the majority of those decisions at the end of their marriages.

Obviously, trying to negotiate the division of property at a time when the relationship is at its lowest point can be very difficult. Sometimes people will try to get away with hiding property or money so that they don’t have to share it with their spouse when they divorce. What they may not realize is that California has a very strict approach to such financial misconduct.

Hidden assets may go to the other spouse

In an unusual case in 1999, the California family courts determined that a spouse deprived of their share of marital property due to the other spouse intentionally misrepresenting their circumstances during the divorce was entitled to the full value of those hidden assets.

The case involved a lottery winner who did not disclose their winning status to their spouse and instead filed for divorce less than two weeks after their win. When the other spouse eventually learned about their misrepresentation of their finances, they took the case back to the California family courts. The judge determined that the failure to disclose the winnings was significant and ruled in favor of the plaintiff. The spouse who was unaware of the existence of the lottery ticket during the initial divorce ended up granted the full value of the lottery winnings.

Hiding assets does more harm than good

Given the dangerous precedent of reallocating all hidden assets to the spouse who did not know about them, those hoping to secure a more favorable property division decision should recognize the risk involved in hiding assets to keep them out of the pool of marital property.

Those who understand the law may be in a better position to protect themselves and avoid mistakes that could lead to lasting financial challenges following their divorce. Discussing one’s desires and circumstances with a divorce lawyer may help someone to start putting together a viable legal strategy that won’t endanger their resources.