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Divorce can be a highly contentious legal matter. Emotions tend to run high, and in some cases, spouses pit themselves against each other as enemies. They may begin to think that they should have a greater share of the marital assets. However, there are penalties for hiding assets in a divorce that can be imposed if either spouse commits this type of misconduct. If you are concerned about the possibility that your spouse may be hiding assets in a divorce, consider contacting the experienced divorce attorneys at Colorado Divorce Law Group by calling (720) 593-6442.

How Assets Are Divided in a Divorce in Colorado

Colorado is an “equitable distribution” state for dividing property during a divorce proceeding. Under Colorado Revised Statutes § 14-10-113, the court must divide the marital property in a “just” manner after considering all relevant factors. Marital misconduct is not considered a relevant factor under this law. However, if a spouse knowingly conceals assets during the divorce process, the court can consider this deception when dividing marital assets. The Court can also consider “economic fault” such as dissipation of the assets for improper purposes, especially in contemplation of divorce and when the other spouse had no knowledge of the dissipation.

What Are Marital Assets?

Colorado Revised Statutes § 14-10-113 defines, in sum, marital assets as any property acquired by either spouse after the marriage except property that was:

• A gift or inheritance to only one spouse
• Acquired from property acquired before the marriage or from an individual gift received during the marriage
• Acquired by a spouse after a decree of legal separation
• Obtained subject to a valid agreement between the spouses

***There is one caveat to all of the above, which concerns when separate property either acquires a marital component, or is commingled to the extent that it transmutes the separate property to a marital asset. These issues are complex and will be the subject of a separate post, but note them for now as they may be relevant to your case.

Duty to Disclose Marital Assets

Colorado law requires spouses going through divorce to fully and honestly disclose specific information on a sworn financial statement, including information about their:

• Assets (this includes what you believe may be your separate property in addition to any property acquired after the date of marriage).
• Debts
• Income
• Monthly expenses

Spouses must swear under penalty of perjury that the information on this form is complete and accurate. They must also sign another document stating that they fulfilled the requirements of mandatory financial disclosures.

Colorado law provides a five-year lookback period regarding undisclosed assets in a divorce. This means that if your spouse failed to disclose an asset or drastically misrepresented its value and you later discover this information, you have up to five years to request the property division order be revised.

Common Assets That Are Hidden During a Divorce

Virtually any asset can be hidden during a divorce. However, more common assets that are hidden during a divorce include:

• Cash
• Financial accounts
• Retirement accounts
• Cryptocurrency
• Real estate
• Business interests
• Jewelry
• Art
• Collectibles
• Hobby items
• Vehicles
• Personal items
• Property and funds held in a trust

How Spouses Hide Assets in a Divorce

Part of the difficulty of tracking down hidden assets is that there are so many ways that assets can be hidden, including:

• Not disclosing the asset as required by law
• Hiding the asset
• Putting the asset in a storage unit
• Moving the asset outside the jurisdiction of the court
• Opening accounts in another jurisdiction
• Putting an asset in someone else’s name
• Putting the asset in a safe deposit box
• Selling an asset for well below market value and re-purchasing it after the divorce
• Acquiring the asset under the name of a business
• Using offshore bank accounts
• Giving the asset to a third party such as a friend or family member
• Not disclosing information on tax returns
• Making “loans” to friends or family members
• Deferring raises, stock options, or commissions until after the divorce
• Exaggerating debt or expense obligations
• Understating income or assets
• Signing a deed or title over to another person to avoid detection or division of the asset
• Intentionally paying more than a spouse owes to the Internal Revenue Service or a creditor to get a refund later
• Taking funds out of joint accounts and putting them in individual accounts
• Not requesting payment or requesting late payments from customers if the spouse has a business
• Causing waste to property to artificially decrease their value
• Leaving rental properties vacant to devalue the income stream

Penalty for Hiding Assets in a Divorce

Colorado Rules of Civil Procedure (C.R.C.P.) 16.2 requires that spouses provide a full disclosure of a couple’s finances during a divorce. If either spouse violates this duty, the court may assign greater benefits to the spouse who was negatively impacted. Additionally, the person found to have hidden assets can be found in contempt of court and potentially be jailed.

What to Do If You Suspect Your Spouse is Hiding Assets

If you suspect your spouse is hiding assets, there are several things you can take to protect your rights and the divorce process, including:

• Monitor your accounts – Once a divorce is underway, you need to be on high alert. Monitor joint accounts, insurance policies, and retirement plans to find out if there are any recent changes, large, unauthorized withdrawals, transfers, or a change in address of financial documents. Document all notable changes and associated dates.
• Conduct public searches – Many things can be uncovered by simply looking for them. You can conduct searches of public documents and filings to try to locate assets or transfers, such as government agencies that record deeds and titles. You can search for assets in your name, your spouse’s name, and anyone you believe your spouse might transfer the assets to.
• Review documents – If you have access to documents and if it is safe to do so, review income statements, tax returns, bank account statements, credit card statements, investment account statements, and other financial records.
• Use the discovery process liberally – During a legal action like a divorce, you have the right to receive information that affects you and your divorce. This includes requiring your spouse to answer relevant questions and provide documents. You may also need to issue subpoenas on third parties like banks or individuals.
• Hire help – A private investigator or forensic accountant may be able to help uncover hidden assets. You can also reach out to the experienced legal team at Colorado Divorce Law Group to ensure your legal and financial rights remain protected.

Contact the Colorado Divorce Law Group for Advice and Guidance

If you are concerned that your spouse is hiding assets or have been accused of this act yourself and would like more information about the penalties for hiding assets in a divorce, consider seeking legal assistance. The Colorado Divorce Law Group has handled many divorce cases, including high net-worth cases and those involving hidden assets. You can schedule a confidential consultation by calling our dedicated and experienced family law attorneys today at (720) 593-6442.