How Hiding Assets During a Divorce Has Severe Consequences

Divorce Lawyer

Divorce AttorneyWhen you are at the early stages of a Texas divorce, you likely know that Texas is a community property state. This means that, aside from a handful of exceptions, any property acquired during the marriage by either of the spouses is defined as community property and will be divided in a divorce case. All community property — since it is owned equally by the spouses — will be subject to division, while separate property is not subject to division. In order to determine which property is divisible, courts look at all assets and debts at the time of the divorce. In some situations, especially in high asset divorces in the Dallas area, one of the spouses will attempt to hide assets to prevent them from being divided.

Hiding assets during a divorce has severe consequences. If you believe your spouse is hiding valuable assets that are community property, it is important to speak with a Dallas divorce attorney as soon as possible about your case.

What Are Hidden Assets in a Texas Divorce?

When one spouse tries to prevent the court from learning about assets by transferring them or attempts to have certain assets significantly undervalued, this practice is known as hiding assets. There are many ways a spouse can try to hide assets. For example, one of the spouses might transfer funds to a foreign account to prevent them from being discovered or might “gift” them to a friend or business partner with plans of getting the assets back after their divorce is final. As we previously mentioned, hiding assets can also involve the intentional undervaluing of property. For instance, one of the spouses might hire an appraiser who is willing to provide a much lower valuation or appraisal of a certain asset so the spouse can receive more property than he/she is entitled to in a Texas divorce.

While one of the spouses can attempt to hide assets in any kind of divorce case, this occurs more often in high asset or high net worth divorces.

Fraud on the Community

Under Chapter 7 of the Texas Family Code, hiding assets is known as “fraud on the community.” When one of the spouses is ruled to have hidden assets — thereby committing fraud on the community — the court begins by “reconstituting the estate,” or calculating “the total value of the community estate that would exist if an actual or constructive fraud on the community had not occurred.” In other words, the court divides the community property between the spouses based on its actual value, once the hidden assets are located and added back into the community property total.

But there are also serious consequences and penalties to face. Texas law allows the court to award a money judgment “in favor of the wronged spouse against the spouse who committed the actual or constructive fraud on the community,” or the court can award a money judgment to the wronged spouse in addition to his/her appropriate share of the community estate. The spouse who committed fraud on the community can also face criminal penalties under Texas law.

Contact a Divorce Attorney in the Dallas-Fort Worth Area

Hiding assets is a serious issue in Texas divorces and you should know an experienced divorce attorney can help you to uncover property in your case. Out of 100,000 lawyers in the state of Texas, our firm has more attorneys named to Thomson Reuters’ list of Top 100 Super Lawyers in Texas. Do not hesitate to get in touch with an aggressive Dallas divorce lawyer at Orsinger, Nelson, Downing & Anderson, LLP to learn more about how we can assist with your case. We have years of experience representing clients in divorce cases in Texas, including high net worth divorces involving hidden assets. Contact Orsinger, Nelson, Downing & Anderson, LLP today.