What happens if people find hidden assets during a divorce?

Divorce statutes in California leave people may very anxious about the process. Community property rules require that spouses disclose their income and assets. They have to divide everything that they earned or acquired throughout the marriage.

They either do so by directly negotiating with one another or through litigation in the California family courts. Sometimes, one spouse discovers during or after the divorce that the inventory of assets was incomplete. Their spouse hid valuable property in the hopes of retaining it for themselves. Such cases can lead to very complicated divorce proceedings or possibly secondary filings after an initial divorce decree.

What happens after one spouse uncovers hidden assets not disclosed by the other?

The courts penalize those who hide resources

The California family courts have set very harsh precedents in cases involving hidden assets. Perhaps the most famous involves a lottery win by someone on the cusp of divorce. Decades ago, a woman about to divorce participated in a lottery pool with coworkers. She dropped out of the pool, but the other people continued buying tickets.

They won a sizable windfall and decided to share it with her. Given that she received the first payment after formally separating from her husband and the fact that the winnings were a gift, she did not disclose them to her spouse or the courts. However, her ex-husband eventually learned about her winnings.

He took the matter back to court, and the courts ruled in his favor. After exhausting all options for appeal, the final ruling was in his favor. Effectively, the courts awarded the entirety of the wife’s lottery winnings to the husband because of the fraudulent failure to disclose the winnings during the divorce proceedings.

Those who uncover financial fraud during or after a divorce can potentially take legal action against their spouses. Evidence of hidden resources could lead to a more favorable property division decree. It is often in someone’s best interests to carefully review financial disclosures to check for signs of financial fraud.

If one spouse uncovers hidden assets, they may be able to request a fair portion of those assets. The courts might even penalize their spouse for hiding those assets. Learning more about California’s rules for divorce can help those facing challenging divorce scenarios.