Financial Disclosures, Hidden Assets and Forensic Accounting in Orange County Divorces

When going through a divorce in Orange County, both spouses are entitled to full disclosure of all assets and income that are on the table. The divorce process is intended to be fair, and these mandatory disclosures are designed to ensure that each spouse has the opportunity to obtain the assets and financial support to which he or she is legally entitled.

In some cases, disclosure is a non-issue. Both spouses have a clear understanding of their joint assets and income, and both are comfortable moving forward with the information they have in their possession (although the filing of financial and property disclosures is still required under California law). In other cases, however, gathering complete information is the first step toward making informed decisions. If you have questions about your spouse’s assets or income – or if you have questions about how your spouse has used his or her assets or income – these are not questions to leave unanswered.

We Help Divorcing Spouses Gather the Information They Need to Make Informed Decisions

If you are preparing to go through a high-net-worth divorce in Orange County and you have concerns that your spouse may be hiding assets or income, we can help. We have significant experience dealing with this scenario, and we can use California’s financial disclosure laws to protect you. Our Irvine divorce lawyers can seek to uncover your spouse’s hidden assets through various investigative means, and we can use forensic accounting to find any income or payments that your spouse may be seeking to hide in your divorce.

Mandatory Financial Disclosures in Divorces Under California Law

In California, both spouses must fully disclose all assets, income, debts and expenses at the beginning of the divorce process. The purpose of these disclosures is to ensure that all assets and income sources are known to both spouses—and that both spouses can effectively assert their rights under California’s community property and alimony laws.

At Seastrom Tuttle Murphy Dockstader, our divorce attorneys not only ensure that our clients comply with California’s mandatory financial disclosure laws, but we ensure that their spouses comply with these laws as well. With our significant experience handling high-asset and high-income divorces, we are familiar with the red flags for disclosure violations and can advise our clients as to when efforts to uncover hidden assets or income may be necessary.

In addition to preliminary financial disclosures, divorcing spouses in Orange County must also make final financial disclosures as the end of the divorce process nears. Here, too, we ensure not only that our clients meet their legal obligations but that they have a complete and accurate understanding of any additional assets, income, debts or expenses that may have come into play and need to be addressed before finalizing the terms of their divorce.

Uncovering Hidden Assets During a Divorce in Orange County

Spouses attempt to hide assets for a variety of different reasons. In some cases, the goal is to prevent the division of hidden assets under California’s community property law. In others, the goal is to continue to cover up ongoing tax law violations—such as evading federal and state income tax by holding assets in offshore accounts. Whatever the case may be, if your spouse is attempting to hide assets from you (or the courts) in your divorce, this is not something to let stand.

In addition to evaluating your spouse’s mandatory financial disclosures, we can also assist with uncovering any assets that your spouse is attempting to hide during your divorce. This includes (but is not limited to) commonly-hidden assets such as:

• Bank accounts
• Retirement assets
• Real estate investments
• Stocks, bonds and other securities
• Business assets and ownership interests
• Offshore bank accounts
• Other offshore assets

If you suspect that your spouse may be attempting to hide assets from you, it will be important for you to engage a law firm to get to work promptly. In some cases, acting quickly can be important for minimizing the effort and cost involved in uncovering (and recovering, if necessary) assets transferred offshore or to other parties. Regardless of the circumstances, uncovering your spouse’s hidden assets will be a critical preliminary step in the divorce process. So, the sooner your law firm can get started, the sooner you can shift your focus to bringing your marriage to an end.

Using Forensic Accounting Methods to Uncover Hidden Assets, Income and Transactions

Depending on the circumstances involved in your divorce, it may be beneficial to engage a forensic accountant to assist in uncovering your spouse’s hidden assets, income or transactions. At Seastrom Tuttle Murphy Dockstader, our divorce attorneys work with highly-experienced professional forensic accountants in Irvine and elsewhere in Orange County who assist in collecting the financial information to which our clients are legally entitled.

If you believe that your spouse may be hiding financial information, we can explain whether hiring a forensic accountant will be beneficial in your situation. If it will, and if you choose to move forward, we can engage a trusted forensic accountant on your behalf. We will work with the forensic accountant during his or her investigation, and we will use the information he or she gathers to protect your legal rights during your divorce.

Spouses’ attempts to hide assets, income or transactions during a divorce in Orange County can have various consequences. For example, you may be entitled to a larger portion of your community estate, and you may be entitled to have the costs of uncovering your spouse’s attempts to hide information covered. If your spouse is hiding information from you, in addition to finding this information, we can seek all appropriate legal remedies on your behalf.

Speak with an Irvine High-Net-Divorce Lawyer in Confidence Today

If you are aware that your spouse is hiding assets or income, or if you have reason to believe that your spouse may be using assets or income for any improper or unlawful purpose, it is important that you seek legal counsel promptly. To speak with one of our Orange County high-net-worth divorce lawyers in confidence, call us at 949-474-0800 or contact us online now.

Common Questions About Financial Disclosure and Undisclosed Assets in an Orange County Divorce

What has to be disclosed in a California divorce?

Both spouses must serve a preliminary declaration of disclosure and, before judgment, a final declaration unless it is waived. The obligation covers all assets and debts in which either party has or may have an interest, community and separate alike, along with income and expense information and supporting documents such as tax returns. The duty is affirmative and continuing, so material changes and newly discovered assets must be disclosed as the case proceeds. It is not satisfied by answering only what the other side thought to ask about.

What are the consequences of hiding an asset?

They are serious, and they do not expire at judgment. Spouses owe each other a fiduciary duty in the management of community property, and a breach of that duty exposes the offending spouse to an award of the other spouse’s share of the undisclosed asset, and in cases of fraud or malice can support an award of the entire asset. Attorney fees and sanctions are available. A judgment itself can be set aside where it was obtained through failure to disclose. The practical result is that concealment usually costs far more than the asset was worth.

How are undisclosed assets actually found?

Through documents, not intuition. The reliable method is to obtain years of bank, brokerage, and credit records and reconcile the money in against the money out, then follow the unexplained transfers. Tax returns and their schedules frequently reveal accounts and entities that were never listed. Loan applications are useful because they were prepared to show maximum net worth. Where a business is involved, its general ledger and the personal expenses run through it tell more than the balance sheet does. Subpoenas to financial institutions and third parties fill the gaps a party will not.

What if assets are held in a trust or a business entity?

Placing an asset inside an entity or a trust does not remove it from the case, though it changes the work required. The questions become whether the interest is community or separate, whether community funds or community effort built its value, and whether the structure is being used to obscure control. Discovery reaches the entity’s books, its formation documents, and the transfers into and out of it. Where community money was contributed to a separate-property structure, or separate money to a community one, tracing determines the respective interests.

About the Firm

Seastrom Tuttle Murphy Dockstader is a family law firm in Irvine representing clients throughout Orange County, and in Los Angeles County. The firm practices family law exclusively. Its attorneys include Fellows of the American Academy of Matrimonial Lawyers and of the International Academy of Family Lawyers, and attorneys certified as specialists in family law by the State Bar of California Board of Legal Specialization. Call 949.474.0800 to discuss a disclosure or undisclosed asset issue with the firm.