Assets, Debts & Divorce
Divorces are rarely easy and often made more difficult by property settlement issues. Keeping track and dividing marital property is often one of the primary issues during a divorce. In community property states everything earned during the marriage is owned equally by both spouses. The same mandate applies to debts as well. Even if only one spouse racked up the debts during a marriage, the other spouse is still responsible for half. It doesn’t matter whether the debts are due to credit card bills, home mortgage or a car loan, both spouses are equally liable in community property states and creditors can pursue both even after a divorce.
Property owned by one spouse prior to the marriage, property inherited by one spouse during the marriage and any property earned or acquired following a legal separation will usually be considered as separate property that the husband and wife own separately. The situation gets less clear when separate property and community property become co-mingled however. If one spouse owned a home as a single person and then got married to a spouse who then contributes to the mortgage payments, the house would become community property, owned equally by both, because they have both contributed to the mortgage. However, any payments made prior to the marriage remain separate property in the vent of a split. Like property, debts incurred before marriage are also considered separate property.
The property issues show why it is important for both spouses to any close joint accounts to avoid co-mingling of funds and debts. Some states will consider the date of separation as the day when one spouse moves out of the marital home but property acquired after that date but while still married could be a problem. Most judges will require proof when a spouse has physically moved out of the marital residence before awarding property rights. A judge will also have the option of deciding when property belonging to one spouse can be given to the other spouse. The decision will be made based on the length of the marriage and which spouse needs the asset more.
However, before the divorce can be processed, both spouses will be required to list all of their assets so the courts can determine an equitable split. Financial disclosure documents must include all real estate, and all real property of value like art, antiques, bank accounts, stocks, 401k programs and salaries. It is not uncommon for spouses to attempt to hide assets during a bitter breakup and hidden assets are any item of value that is not reported to the court. Some people might attempt to hide assets out of greed; others might do it to get even when they are motivated by feelings of anger or betrayal, but hiding assets in order to keep them from an ex-spouse is illegal.
One of the most common ways assets are hidden is when one spouse “sells” real property or other assets to a friend or relative with the sole intention of getting it back immediately after a divorce is finalized. Other methods of hiding assets include business owners who pay themselves with checks for non-existent employees or services and the practice of hiding cash by converting it into Savings Bonds or Traveler’s checks that won’t show up on bank statements.
If you have noticed evidence of unusual amounts of cash being moved around or spent on odd things and you suspect your not-so-significant other is attempting to hide assets prior to your divorce action, you would be well-advised to contact an attorney as soon as possible.