Avoid These Dirty Divorce Tricks in a High Net Worth Divorce

When you have a lot to lose, you’re willing to do whatever it takes – unfortunately, that is the reality in many a divorce involving high net worth individuals. Any Irvine divorce attorney can tell you that these divorces are usually the ones where their clients fight the hardest and run into the most significant sets of issues. From hiding assets to using their children as leverage, there are several dirty tricks high net worth individuals might apply to get what they want. However, a good Irvine divorce attorney will always counsel you to avoid that behavior at all costs.

Interested in learning more about the divorce tricks you need to avoid in a high-net-worth divorce? We review some of the most common here.

Undervaluing or Hiding Assets

If the majority of your or your spouse’s wealth comes from a business or corporation, then undervaluing the stakes within that business is one of the ways you might try and get out of paying what’s due. To undervalue a stock, a person will often report that it is less than its actual value. Unfortunately, what usually happens is that their soon-to-be former spouse is not intimately involved with the financial particulars of their spouse’s business, and therefore accepts this figure without doing their own appraisal or investigation into its actual value.

No matter how far removed you might be from your spouse’s business, it’s important to remember that you’ve hired an Irvine divorce attorney to do precisely this type of work. Even if you don’t suspect that your spouse is fudging the numbers, you should always err on the side of caution and make sure you do your homework rather than merely accepting what your spouse claims at face value.

Meeting with Various Irvine Divorce Attorneys to Create Conflicts of Interest

One of the most common tactics a dubious spouse might employ is conflicting out the best attorneys in town. How would that work? Let’s say your spouse decides to take a meeting with five of the best lawyers in Irvine. During those meetings, they go into great detail about the particulars of your case, including marital issues, financial arrangements, and more. Once those meetings are completed, your spouse makes a selection and eliminates four of the attorneys. However, while you may think that means they’re available to take the case, think again. Because they’ve been provided so many intimate details related to the case, they have established some attorney/client privilege. Your spouse can effectively claim this privilege should bar the attorney from representing you in court.

Hiding Assets in a Child’s College Plan

529 plans are customary for children’s college funds, but devious spouses will often use them in order to hide assets. They might suddenly pump the 529 they own solely with cash and withdraw it later. Though they will take a tax hit, it’s probably more economical than being truthful about the assets they own.

Speak with an Irvine Divorce Attorney

Are you going through a complex high net worth divorce? An Irvine divorce lawyer can counsel you through the process. Contact our office today to get started.

Frequently Asked Questions

What are the most common tactics used to gain an advantage in a high-asset divorce?

A recognizable set. Delaying disclosure so the other spouse runs out of money before the facts emerge. Suppressing business income during the valuation period by deferring revenue or accelerating expenses. Transferring assets to relatives or affiliated entities. Running up joint debt. Cutting off a spouse’s access to accounts and credit to create financial pressure. Filing motions that generate cost without advancing anything. Each of these is met with a specific remedy, which is why identifying the pattern early matters more than reacting to any single incident.

What can be done about a spouse who refuses to produce financial records?

The court’s tools are substantial. Motions to compel with monetary sanctions, orders deeming matters admitted, evidentiary preclusion so a party cannot rely on evidence they withheld, and attorney fee awards for the cost of obtaining what should have been produced voluntarily. Subpoenas to banks, brokerages, employers, and accountants bypass the party entirely. Where the nondisclosure concerns an asset, the fiduciary duty between spouses exposes the concealing party to an award of the other spouse’s share, and up to the entire asset where the conduct involves fraud or malice.

How is financial pressure as a tactic countered?

With early temporary orders, which is why they should be sought at the outset rather than after the pressure has done its work. A request for order can direct interim spousal and child support, allocate payment of the mortgage, insurance, and household expenses during the case, restore access to accounts, and require one spouse to contribute to the other’s attorney fees based on relative ability to pay. That last remedy is the one that most directly defeats a strategy of outspending the other side.

Do these tactics actually work?

Rarely, and they frequently backfire. Family courts see the same patterns repeatedly and are unsympathetic to them, and California provides fee sanctions specifically against conduct that frustrates settlement or the disclosure obligations. A party who conceals an asset can lose the entire asset. A party who drives up cost unnecessarily can be ordered to pay the other side’s fees. The practical lesson is that a documented record of the other side’s conduct is itself valuable, because the remedies depend on proving the pattern.