What Happens If One Spouse Hides Assets During a Washington Divorce?

The divorce process in Washington state involves a series of negotiations between the separating parties. Even if the spouses are angry or combative towards each other, they still need to work through decisions like dividing property in a fair and equitable manner. In contentious divorce cases, the parties often benefit from hiring their own attorneys to represent their interests and moving through the mediation or arbitration process to achieve a workable solution. The couple may also decide to take the case to litigation, where the judge will oversee the terms of the divorce. Whether your divorce is more amicable or highly contentious, it’s essential that both parties approach these critical negotiations openly and honestly. While no one expects you to be on friendly terms with your soon-to-be ex-spouse, remaining civil during the divorce process is essential to ensure that you can both walk away from your marriage with the solid foundation you need to begin the next chapters of your lives.

Learning that your spouse has hid assets from you as you move through the Washington divorce process can be maddening and frustrating. This failure on the part of the other party to negotiate the terms of your divorce in good faith often feels like a betrayal. Cases involving hidden assets during divorce in Washington state are taken seriously by the court, as the actions of the spouse concealing their assets amounts to a form of fraud. Washington courts take a serious approach to asset concealment divorce cases, and the spouse acting in bad faith can face several legal and financial penalties. Uncovering hidden income during divorce that your spouse has attempted to conceal from you can be destabilizing, so it’s best to share this information with your trusted and experienced Seattle divorce lawyer as soon as possible. Let’s take a closer look at some of the most common property division disputes during a Washington divorce and the steps you can take after discovering that your spouse has tried to hide assets from you during these crucial negotiations. 

Common Ways That Assets Are Concealed During Divorce in Washington State

There are many strategies that someone can use to keep certain assets hidden during the divorce process in Washington state. Since Washington is what’s known as a community property state, any asset that either spouse earns or acquires during the course of the marriage legally belongs to both spouses, regardless of which spouse actually acquired the asset. In some cases, a spouse may feel that the community property laws are unfair, prompting them to hide certain assets and keep them from being subject to property division determinations. Below are just a few of the ways that someone may attempt to avoid full and honest financial disclosure during divorce.

Transferring Money to Others

A spouse may try to loan or gift some of their assets to a friend or family member so that this property is not subject to property division negotiations and determinations during the divorce process. The spouse usually explains to their trusted third party that they will take the asset back once the divorce is finalized, and that they appreciate their friend or family member helping them keep these assets out of divorce negotiations.

Making Up Business Expenses or Liabilities

If the divorce involves a small business, one spouse may make up fake debts to creditors or other expenses and then “pay” these amounts to hidden accounts or trusted friends or family members to reduce the number of assets subject to property division negotiations. Business owners may also manipulate records to show falsely low profits in order to keep some assets away from property division calculations.

Using Cryptocurrency 

Certain digital assets like cryptocurrency allow someone to use private keys for untraceable digital wallets and transfer assets to accounts under different names or identities, making it much more difficult to identify ownership or keep track of financial assets. 

Setting Up Secret Bank Accounts or Withdrawing Cash

Some spouses set up secret bank accounts and begin to transfer assets into it before the divorce process moves forward, making it more challenging for the other spouse to gather a clear and accurate financial picture. Another strategy for concealing assets during divorce is for a spouse to withdraw cash and stockpile it in a secret location. 

Legal Duty to Disclose Financial Information During Divorce

Washington state expects divorcing spouses to negotiate in good faith and approach this process with honesty and transparency. To that end, the court requires both parties to complete a Financial Declaration, which is a sworn statement that details each individual’s income, expenses, assets, and debts. Each spouse must also submit documents that support these declarations, such as tax returns, proof of income, account statements (i.e., IRAs, pensions, crypto wallets, etc.), outstanding debts (i.e., mortgages, credit card statements, etc.), and assets (i.e., vehicle titles, real estate deeds, financial statements for businesses, etc.). Failing to truthfully disclose financial information during the divorce process is a serious matter, and the court may impose any number of penalties. 

Tools For Uncovering Hidden Assets in a Seattle Divorce

If you are worried about your spouse’s honesty and transparency during the divorce process, there are certain tools you can use to help you identify any hidden assets they may be attempting to keep from you. Here are just a few of the tools you can use to look for concealed assets during a divorce in Washington state.

Forensic Accounting

Highly specialized accountants can help you investigate a spouse’s financial records and look for inconsistencies or red flags that may indicate attempts to conceal certain assets. Forensic accounting may involve tracing funds, audits of business records, lifestyle analysis, and other strategies that uncover discrepancies between actual spending and reported income. 

Formal Discovery

Like any other legal process, divorce allows the parties to engage in formal discovery, which requires the parties to produce detailed financial records and other relevant documents to ensure that the property division negotiations proceed fairly and transparently. Subpoenas, depositions, and other legal tools can also be used to compel spouses, banks, employers, brokers, and other parties to answer questions and produce documents as requested. 

Possible Consequences For Those Who Hide Assets During Divorce

Failing to truthfully disclose accurate financial information during the divorce process in Washington state can result in serious consequences. Concealing assets amounts to a form of fraud and deceit, as these actions undermine the integrity of the divorce itself. The court may impose any number of penalties on someone who attempted to hide assets during divorce, a few of which are listed below.

Contempt of Court

Any party that violates the court’s legal disclosure requirements may be charged with contempt. Contempt of court charges can result in fines (and, in extreme cases, potential jail time).

Attorney’s Fees 

The spouse acting in bad faith may be ordered by the court to cover the other party’s attorney’s fees and any costs associated with the hiring of forensic experts who played a critical role in uncovering the concealed assets.

Loss of the Concealed Assets

The dishonest spouse experiences a significant loss of credibility in the eyes of the court when concealed assets are uncovered. The judge may award the uncovered assets to the other spouse as a form of punishment for the underlying dishonesty. 

How to Protect Yourself During Financial Disclosures

The best way to protect yourself from allegations of deceit or intent to conceal assets during divorce is to gather and organize financial documentation, demonstrating your commitment to open and transparent negotiations with your spouse. Avoid potentially suspicious activities like transferring large sums of money. If you suspect that your spouse may be hiding certain assets from you, share these concerns with your highly experienced Seattle divorce lawyer so that they can help you identify the most strategic course of action. In most cases, it’s best to avoid directly accusing your spouse of concealing assets without concrete proof, as this can escalate an already contentious situation and complicate the case even more. Your attorney will work with you to determine the best path forward that preserves the integrity of your divorce case. 

FAQs About Asset Concealment During Divorce in Washington State

How can I prove my spouse is hiding assets during divorce?

You can hire a forensic accountant to identify inconsistencies and other red flags that uncover hidden assets. 

What happens if hidden assets are discovered later?

The court can reopen the divorce case to reassign the property in such a way that penalizes the dishonest spouse. 

Can the court award me more if my spouse conceals assets?

Yes, as the dishonest spouse loses credibility in the eyes of the court and the innocent spouse is typically compensated to make up for the fraudulent actions of their spouse. 

Get Started With Seattle’s Trusted Team of Divorce Attorneys

Divorce can be a stressful and confusing time, especially if you are struggling with a spouse who refuses to negotiate honestly or in good faith. At the Hemmat Law Group, our highly experienced team of dedicated and trusted divorce attorneys is ready to serve you with the attention, respect, and care you deserve. We will advocate for your best interests and answer your questions at every stage of the divorce process. Please reach out to our Seattle, Washington office today by calling (206) 682-5200 to get started with a skilled family law and divorce attorney.