Most divorce cases are accompanied by a variety of emotions: sadness, anger, grief, frustration, embarrassment, and relief. One emotion neither party to a divorce should experience is the feeling that they got away with something. You can and should celebrate settlements that you feel good about (or the mere fact of settlement at all), but neither you nor your ex should feel satisfaction at pulling the wool over each other’s eyes. In California, especially, hiding assets from your partner so as to avoid a fair settlement is particularly frowned upon.
Let’s take a look at why hidden (or omitted) assets are so bad and what you should do if you discover after a divorce that your ex hid assets from you.
You’re Required to Make A Full and Accurate Disclosure
The rulebook that governs divorce in California, called the California Family Code, is quite clear that parties to a divorce need to be honest and forthright about all their assets and debts. Specifically, Family Code Section 2100 calls for “a full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties, regardless of the characterization as community or separate, together with a disclosure of all income and expenses of the parties.”
In practice, this means preparing and sharing a what’s called a preliminary declaration of disclosure with your ex and listing all your sources of income, expenses, assets, and debts as well as other key pieces of documentation, such as tax returns. The court does not look kindly upon those who hide or devalue assets to avoid a fair and appropriate settlement or support order.
In fact, if it finds that an asset was intentionally hidden, the Court may award an uneven division—up to 100%—to discourage such behavior.
You’re Entitled to Your Fair Share
California is a community property state. That means that whatever was acquired during the marriage may fall into one of three buckets: yours, mine, and ours. But just because your divorce has settled does not mean you’ve given up your rights to your fair share of the community property. Moreover, you’re entitled to your fair share even if the asset was missed due to an honest mistake or a dishonest act on your ex’s part.
Here’s how it works: The California family law system has the right to divide and assign every element of your community property, such as bank or retirement accounts and real property, and this right carries on after a divorce unless you specifically agree otherwise, and this is rare. That way, if you discover an omitted asset after your divorce is finalized, you can still ask the court to use its power (its jurisdiction) to divide and assign your community property interest.
Of course, it’s up to you whether the asset is valuable enough to press the matter. A good divorce lawyer will help you understand what paperwork you need to prove your case, your odds of success, and your return on your financial and emotional investment.
You Have Options on How to Proceed
In the event you discover or have reason to believe your ex hid assets from you, you have several approaches to consider. Moreover, you’re under no obligation to act immediately. There is no statute of limitations and your right to recover assets lasts until the entire community property is disclosed and divided.
Here are some of the approaches you can consider and their pros and cons:
- Do nothing at all (at least for now). Again, there is no statute of limitations.
- Pros: Certainly the path of least resistance. Especially if your divorce was acrimonious or complicated, you may not be ready to jump right back into conflict. You won’t lose your right to the omitted asset if you change your mind later.
- Cons: Money spent is hard to get back and paper trails can go cold. If your ex liquidates or spends the omitted asset, it can be hard to recover what you’re due. Similarly, what you might be able to prove today can be far more expensive and labor-intensive to prove years down the road.
- Negotiate on your own. In the event of an honest mistake, resolution may be as easy as pointing out the omitted asset and asking for your fair share.
- Pros: Certainly the most direct route and potentially the least expensive. Even if the asset was hidden on purpose, alerting your ex to your knowledge of the asset (and your rights that go along with it) might be all the push they need to give you back your fair share.
- Cons: Depending on your ex and the nature of your divorce, you may find yourself in the middle of a prolonged negotiation—or worse, a prolonged battle. In addition, you may not realize the full extent of the omitted asset or undervalue it. Going it alone may be direct and less expensive, but your outcome is less sure and may not be the full amount you deserve.
- Hire an attorney. In the event you don’t want to fight this yourself, your ex won’t negotiate in good faith, or you’re not sure of the value of the hidden asset, an attorney may be your best choice.
- Pros: Certainly the most straight-forward. If you hire an attorney, they will take care of all required paperwork with the court and with your ex, help you value your fair share of the asset, and—in the event your ex hid the asset on purpose—guide you in seeking fees and pursuing a higher percent of the omitted asset.
- Cons: Depending on the value of the omitted asset, this may be more of an expense than fair resolution is worth. Attorneys’ fees are not guaranteed nor is getting a more than 50% award of the omitted asset if it was not intentionally hidden.
Hidden Assets Found After Divorce Are Your Right—Not Your Problem
Every divorce is as unique as the folks in it. If you discover (or think you’ve discovered) a hidden asset after divorce, you have the right to your fair share, but it’s not your obligation to “fix” things the moment you discover it. If yours was a high conflict or high asset divorce, you’ve already been through a lot.
Feel free to take a minute to consider your emotional reaction, weigh your options, and consult an expert before you proceed. Certified family law specialists will help you assess your best path forward for your particular situation, so you can enjoy what’s yours without unnecessary headaches.
Van Voorhis & Sosna are certified family law specialists who know the complexities of divorce in the Bay Area because it’s our sole focus. We offer legal advice and representation based on integrity, trust, and understanding. Contact us today, or call 415-539-0422to schedule a free legal consultation.
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