Hidden assets are assets (such as money or property) that one spouse owns but does not disclose to the other spouse. Hiding assets is typically done to conceal the asset, so said spouse does not have to share the asset with the other spouse during the divorce. Hidden assets are a particular issue in Texas because Texas is one of only nine community property states in the United States.
In Texas, hiding marital assets is referred to as “fraud on the community” or fraud on the marital community.
Texas Hidden Assets Lawyer
To discuss divorce, finances, and any concerns you may have about hidden assets, reach out to Horak Law. Texas family law attorney Matthew Horak is skilled at uncovering hidden assets in even the most complex, high-net-worth divorce. He can get the maximum amount you are entitled to in your divorce settlement.
Call Horak Law today at (713) 225-8000 to schedule your first consultation. Horak Law has offices in Houston and The Woodlands, but we accept clients throughout the State of Texas including Harris County, Fort Bend County, Liberty County, Waller County, Galveston County, Montgomery County, and Brazoria County.
- What Is A Community Property State?
- The Penalty For Hiding Assets During A Divorce In Texas
- Statute Of Limitations For Hidden Assets In Texas
- Defenses To Hidden Assets In Texas
- What Are Some Signs A Spouse May Be Hiding Assets From Their Partner?
- How To Find Hidden Assets
- Additional Resources
Texas is a community property state. This means that all the property that either spouse acquires during the marriage is community property. Therefore, both spouses own community property equally, and it will be equally divided during the divorce.
If it is discovered that one spouse is hiding assets during an ongoing divorce, a Texas judge will often give control of that asset to the other spouse for the duration of the proceedings. The asset will then be divided along with the other marital property during the divorce.
If a hidden asset is discovered after the divorce, the judge may award the asset entirely to the other spouse, along with attorney’s fees.
To get technical, under Texas law, after a hidden asset is found, the judge will distribute the asset in the manner they deem “just and right,” which may include the following:
- awarding the wronged spouse part or all of the formerly hidden asset
- awarding a monetary judgment to the wronged spouse
- awarding the wronged spouse both a money judgment and part or all of the formerly hidden asset
Given the severe penalties for hiding assets, it is generally not worth the risk for a spouse to conceal assets. In many cases, they will lose the hidden asset and more.
A case to recover hidden assets from a former spouse after a divorce must be filed within two years of the final divorce decree. This statute of limitations is tolled for any time the court does not have jurisdiction over the spouses or the property.
Unintentional non-disclosure of an asset can be a defense against hiding assets. For example, suppose an asset is discovered after a divorce, and the spouse unintentionally did not disclose the asset. In that case, the judge will consider that fact, and the penalty will be much less severe than if the hiding was intentional.
The following situations could be indicators that a spouse is trying to hide assets from the other spouse in anticipation of a divorce.
- Overpaying debts – one way to conceal assets is to pay more than is owed on a debt. In some cases, such as overpaying taxes, the spouse may expect to get a refund later, after the divorce. In other cases, such as overpaying a credit card bill, the spouse may intend to carry the credit forward, so they have extra credit on the card to spend freely after the divorce.
- Taking control of financial information – if a spouse suddenly changes passwords on an online bank account or changes the address for financial statements from home to their work address, that may be a red flag that they are trying to keep financial assets from their spouse.
- Paying “Debts” to friends or family – if one spouse suddenly starts writing checks to friends or family for supposed debts that the other spouse did not know about, that could be a red flag that the check-writing spouse is trying to tuck funds away with a trusted source until after the divorce.
- Similarly, excessive gifts to third parties by one spouse may be considered unfair to the other spouse.
- A sudden unexplained decrease in income – if a spouse claims to be making less money at a steady job with no explanation, it could be a sign that they are making the same amount of money or more but diverting a portion of it to a private account or otherwise concealing it.
- Discovery of foreign (offshore) or cryptocurrency accounts – it is easier than one might think to set up an offshore bank account or a cryptocurrency account. If the other spouse is unaware of such an account, it is a relatively easy way to conceal funds.
If an individual suspects their spouse is hiding assets in anticipation of a divorce, they can do a few things. First, they can take an inventory of all assets acquired during the marriage. Doing so may be time-consuming, but it can be worth it in the long run. They should get copies of and review all financial information, including taxes, that they can get their hands on as quickly as possible. They should look for large unexplained or otherwise suspicious transfers and purchases. It may also be advisable to search public records to see if the other spouse has any unknown property in their name. Social media may sometimes reveal evidence of large purchases, vacations, promotions, or other helpful information.
In most cases, it will be greatly beneficial for the spouse to hire a divorce attorney and a forensic accountant to help identify any potential hidden assets. An experienced divorce attorney will know where and how to look for assets. They can review disclosures and request discovery that may reveal assets. They may also be able to subpoena records a spouse would not otherwise have access to.
Uncovering Hidden Assets in Divorce Litigation – This article by HuffPost provides advice for finding hidden assets during a divorce.
Harris County Family Courts — Click the link to view information about various family courts in Harris County by judge. There are also links to the Texas Family Code and the State and American Bar Association Family law sections.
Houston Hidden Assets Attorney | Harris County, TX
At Horak Law, Harris County family law attorney Matthew Horak handles highly complex divorce matters for clients throughout Texas. He has over a decade of experience in dealing with high-asset divorce, including many situations where one spouse attempted to hide assets from the other. Once you retain him for legal counsel, Mr. Horak will work diligently to recover the assets so they can be divided equitably.
Call our office at (713) 225-8000 to learn more about your legal options. Horak Law has offices in The Woodlands and Houston, TX.