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      Covering or Uncovering Concealed Assets in Divorce Proceedings

      Covering or Uncovering Concealed Assets in Divorce Proceedings

      Covering or Uncovering Concealed Assets in Divorce Proceedings 687 442 Dorter

      Concealed assets or hidden assets can significantly impact property settlement in divorce. Knowing your rights and entitlements is important in the division of assets.

      Below we identify how assets can be concealed or hidden, the consequences of hiding assets and what to do if you think assets are being hidden. It is important to be able to protect your assets legally, so you can obtain a fair property settlement.

      1. What are hidden assets?

      In Australian family law, both parties are obliged to provide full and frank disclosure of their assets, liabilities, superannuation and financial resources which they own or control. This includes any assets which are held in their name, held jointly with others, or through trusts, companies or partnerships. The purpose of disclosure is to confirm the financial position of each party so a just and equitable division of assets can occur. Australian family law mandates complete transparency and honesty in disclosure.

      Assets may be hidden when a party avoids disclosing their true financial circumstances during the family law process. A party may attempt to keep assets from the other party, to minimise spousal or child support payments, avoid financial obligations like tax, or to obtain a greater property settlement than they are entitled.

      Common techniques to conceal assets may include:

      • Understating income: Someone may intentionally understate the value of assets or income to lessen their net worth.
      • Exaggerating liabilities: Someone may assert loans or debts exist to increase their financial obligations.
      • Transferring assets to third parties: Someone may transfer assets to others under the guise that they were in debt to them to minimise their net worth.
      • Using overseas accounts or investments: Someone may arrange for their income to be paid to other accounts or the income not to be paid until after the property settlement to minimise their net worth.
      • Purchasing items of high value: Someone may purchase ‘investment’ items like artwork or jewellery to minimise their net worth, and sell it off after the property settlement.
      • Using non fungible tokens, cryptocurrency or cash: Someone may convert assets to another form of currency or cash to hide their net worth.

      An example of a hidden asset could be where a spouse transfers a significant amount of money to a family member or friend, which was not actually repayable but claiming it to be a loan repayment. Loan repayments are frequently contested and controversial in family law matters. Once the property settlement is finalised, the money may be transferred back to the spouse as it was initially concealed from the division of assets.

      Hiding assets in divorce proceedings can prevent a party from receiving a fair and equitable distribution of property and can cause a miscarriage of justice. It is prohibited under the Family Law Act 1975 and may lead to significant consequences, including the setting aside of the settlement in the future.

      Detecting Hidden Assets

      If you suspect your spouse is concealing assets, steps should be taken to uncover them. This involves due diligence and investigation, including:

      • Reviewing financial statements and tax returns
      • Reviewing bank statements
      • Reviewing loans
      • Reviewing other documents including variations to Deeds and other commercial documents

      Ensure you seek legal advice from a family lawyer experienced in property settlements to thoroughly walk you through the legal process and obtain court orders where it is necessary to minimise assets being hidden.

      Concealed assets can be found within bank statements, tax returns, deeds and business records. As experienced family lawyers we help by examining these documents to investigate and provide directions to uncover these hidden assets. We help you navigate this process and provide you the clarity you need to protect your financial interests and obtain a fair settlement.

      Consequences of concealing assets in divorce

      Concealing assets in the Australian family law Courts can lead to significant legal consequences. These include cost orders, findings of contempt and in some circumstances, even imprisonment. Financial ramifications can occur, if the Court sets aside the property orders or property settlement, revisits the financial settlement and compensates the honest party when concealed assets are found or a party is found to have misrepresented their financial circumstances.

      Preventative and protective measures to preserve your assets

      A property settlement usually involves the division of assets so that the parties each receive a just and equitable outcome. A binding financial agreement (BFA) or prenuptial agreement is one way to protect your assets legally. These agreements can be entered into before living together, whilst living together (and prior to separation) or after separation. These agreements help set out how assets will be distributed in a property settlement and can provide certainty and security for both parties.

      Under certain circumstances however, the Courts can set aside legally binding agreements. For example, if signed under duress or if there was a fraud. To ensure a legally binding agreement is enforceable, you should obtain legal advice from an experienced family lawyer.

      Summary

      Seeking legal advice from experienced legal counsel is imperative to understand and obtain a transparent and fair process for property settlements. Full disclosure of parties’ interests in their assets and financial resources is mandatory and must be full and frank to avoid unwanted consequences. Attempting to conceal assets is prohibited under the Family Law Act 1975. The consequences can be severe, both legally and financially.

      Our experienced family lawyers deal with complicated property matters where assets have been hidden and have uncovered these assets. We are here to help protect your interests and achieve a just and fair settlement for you.

      If you have recently separated and you are concerned about achieving a fair outcome or suspect your spouse is hiding assets, contact us. We can assist you.

      Our experienced family law team will work closely with you to understand and assess your situation and then plan a course of action to investigate to ensure you receive a just and fair property settlement. We have a wealth of experience in dealing with high net worth property settlements and investigating hidden assets and are well-versed in dealing with hidden assets.