Is My Spouse Hiding Money?
The honeymoon stage is long over, the marriage has completely deteriorated, and divorce has become the only option. However, during the divorce proceedings, you discover your spouse has misled you about your financial situation. Maybe your spouse has lied about how much money he or she has made or perhaps he or she is receiving an income from their family to support your lifestyle. Either way, it may lead you to question how you will fare financially during and after the divorce. The blog is designed to help you find out.
There are numerous ways that a spouse can mislead you regarding your actual financial situation, so here is a list of the three most common ways.
1. Hiding Assets in a Business
If your spouse is a business owner and you suspect he or she is lying about their financial situation, then your spouse may be using their business to hide assets from you during the divorce proceedings. For example, a business owner may intentionally devalue their business by reducing prices, overpaying taxes, or allowing payment defers in an attempt to cut you from receiving a more significant amount in the divorce. Your spouse may also attempt to place any property they own into the businesses’ name to protect it during the divorce; however, this will almost certainly fail because it would still be considered a marital asset.
In South Carolina, if your spouse has hidden assets during the divorce, then the judge may order sanctions against them. In more severe cases, if your spouse has lied under oath, they may face a perjury charge.
2. Trust Funds and Family Money
Perhaps your spouse is the beneficiary of a trust, and you have been using that to support your lifestyle during your marriage. Now, since your marriage is coming to an end, you may be wondering if you have any claim to the assets in the trust. While Trusts are a great way to secure an estate, they are not entirely infallible.
South Carolina is an equitable division state, which means the court will determine what they believe is a fair allocation of the assets. Although any premarital property and inheritance or gifts are typically excluded in distributing an estate, there is an exception. If your spouse’s family or trust assets are being utilized as a marital asset, then the assets used would be subject to equitable distribution. For example, if your spouse uses money from their parents or their trust to buy a new car for the family or pay household bills every month, that would qualify as a marital asset and thus be subject to equitable distribution. However, any assets not used as a marital asset would be considered separate property and therefore not subject to equitable distribution during the divorce.
It is important to note that your spouse may attempt to create a trust to hide assets during a divorce. However, this will likely fail because assets obtained during the marriage, subject to a few exceptions, are subject to equitable distribution.
3. Living Above Your Financial Means
If you are going through a divorce and you discover that you have been living far above your means because of your spouse’s actions, then you may be wondering what you can do.
In South Carolina, a spouse can only be held liable for their spouse’s debts if the debt was incurred during the marriage and was used for marital purposes. However, each spouse would typically be held responsible for any credit card debt they incurred in their name. If your spouse has taken out loans in your name without your knowledge, then you may have other legal remedies.
What to do when you discover your spouse is hiding assets?
If you suspect your spouse has misled you regarding their financial situation, you should immediately notify your divorce attorney. Doing so will signal to your SC lawyer to ask specific questions regarding financials, thus protecting your financial interests.
Call Henderson & Henderson if you have a family law or divorce question at 843-212-3188. You can also email Jennifer directly.