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Denver Divorce and Hidden Assets

hidden-assets

Attorneys know the importance of financial disclosures in any divorce case. Colorado Rules of Civil Procedure rule 16.2 sets forth the procedural aspects, or rules, a court expects parties, with or without attorneys, to follow related to case management. This includes rules regarding disclosure of documents and information related to the financial issues of a divorce case, which can include property division, debt division, maintenance (alimony), and child support.

Sadly, from time to time, we see cases in which one party will attempt to hide assets from the other party. In most cases people are forthcoming, understanding that they are indicating to the divorce court, under penalty of perjury, that they have provided a complete listing of their assets and debts. However, every once in a while, you will get that one person who feels they might get away with not disclosing a bank account, stock account, or perhaps that tangible piece of property, such as artwork or a piece of expensive jewelry.

Of course, there are limitations to what an attorney, or even a private investigator, might be able to find. In employing the tricks-of-the-trade, family law attorneys know how to go through the various financial disclosures to assess whether there are other items being concealed. Of course, this is not fool-proof. Likewise, people may come to an attorney after their divorce is done, indicating they believe the other side hid something from them. Fortunately, whatever the situation, statute affords parties to a Colorado divorce case a remedy, via a 5 year window, in which to seek relief should hidden or undisclosed assets become known.

Initially, C.R.C.P. Rule 16.2(e)(2) requires the parties to a divorce case to voluntarily disclose the following as can relate to assets:

  • A “Sworn Financial Statement”
  • The last three years of personal (and business if applicable)
  • Personal financial statements
  • Business financial statements
  • Real estate documentation
  • Investment account statements
  • Retirement account statements
  • Employment benefit statements
  • Bank statements Income documentation
  • Insurance documentation

Aside from the three years for tax and personal/business financial statements, parties are initially only required to disclose the “most recent” other items listed above. These statutorily mandatory disclosures are a first line of defense for your attorney to assess the marital estate. This will generally be done in conjunction with the client also reviewing the other side’s disclosures. Though an attorney can assess whether there are irregularities, or things that lead the attorney to believe an asset is being hidden, the client may have knowledge of various assets and will readily indicate, “she has a pension that’s not listed….” or something alerting the attorney that an asset is not being disclosed. From there, the attorney can undertake various methods of investigation to ferret out undisclosed aspects of the marital estate.

If, after thorough analysis by the attorney, as well as the potential issuing of discovery (more specific and heightened request for information), there are no other assets discovered, or other side still does not disclose assets, the case will proceed to resolution. However, when assets not disclosed are discovered after that resolution, C.R.C.P. 16.2 (e)(10) comes into play. Specifically, C.R.C.P. 16.2 (e)(10) indicates, “…it is the duty of parties to an action for decree of dissolution of marriage, legal separation, or invalidity of marriage, to provide full disclosure of all material assets and liabilities. If the disclosure contains misstatements or omissions, the court shall retain jurisdiction after the entry of a final decree or judgment for a period of 5 years to allocate material assets or liabilities, the omission or non-disclosure of which materially affects the division of assets and liabilities.” In lay terms, the court retains jurisdiction for a period of 5 years, from the date the inaccurate disclosure was made, over property in a divorce case, discovered to be hidden or misstated after the case is done. Thus, a statutory safety net exists to catch those who would otherwise cheat their spouse.

In application, the discovery of an asset may lead to a reopening of the entire asset division, and not just related to that asset. For example, let’s say that the parties to a divorce case own a home, with equity of $200,000 and that is their only asset. They end up dividing that equity equally, with each getting $100,000. Subsequent to the divorce, it is discovered that the husband had a Swiss bank account with $200,000 during the marriage, that he kept hidden and then squandered away gambling. In that instance, though an undisclosed asset existed, it is now gone. Wife’s recourse may include not only going after husband for her half of the $200,000 from the account, but also seeking redistribution of the home equity so as to compensate her for her share. Circumstances will vary from case to case and any omission or non-disclosure must be material. In the example given above, there is certainly materiality to the scenario. Conversely, it might be discovered that the wife failed to disclose a $5,000 bank account, but all other assets have otherwise been divided in a marital estate of $500,000. In that instance, the relief sought would like be one-half of the $5000, plus fees and costs. Again, situations vary. Though C.R.C.P. 16.2 is not the only statutory tool for dealing with undisclosed assets, its language puts all on notice as to both potential rights, consequences, and time frames.

Your Denver divorce attorney will assist you in wading through the finances of your case, pre-decree, including as relates to assets. After the case is done, should you discover that the other side failed to disclose something, or materially misstated the value, you would be wise to consult an attorney to discuss how to rectify the situation and make sure proper division of the newly discovered asset occurs. For those hoping to get away with hiding property, which we certainly do not encourage, it should be noted that a good attorney may ultimately be able to get to the bottom of things and that, in the end, not only will you likely be required to split up that asset, but also pay fees to the other party. The legal system, including the family law arena, is based on an honor code and that notion that people proceed in good faith as they work through a case. Thankfully, statute provides some remedy to deal with those who violate that code.