I am worried that my spouse will try to hide assets from me. How can I be sure I get a fair share of the business and other assets?
There are two important related issues raised by this question. The first is to know exactly what all of your assets are at the time of the divorce. It is not uncommon for one spouse to be responsible for and to manage most or all of the family’s finances. When you are faced with a divorce, you may not readily know exactly what you own and where the money is. This is especially true if you and your spouse have been married for many years, or if you have numerous accounts or properties. California law requires both spouses to provide complete disclosures of all known assets and liabilities to the other spouse. Near the beginning of the case your attorney will help you fill out two important documents: a Schedule of Assets and Debts and an Income and Expense Declaration. Your spouse will be required to do the same. These documents will provide you with information about all of your and your spouses’ property, whether separate or community. They will also show all income that your spouse is receiving.
If you believe that your spouse may be secreting income or assets, you should immediately share your concerns with your attorney. If your spouse is not forthcoming with information about all assets and sources of income, you have the right to seek additional information through discovery. Your attorney will discuss a discovery plan with you, which may include interrogatories (questions that your spouse will be required to answer under oath), requests for additional documents, subpoenas to various financial institutions and perhaps a deposition of your spouse or other individuals familiar with your family’s finances.
Disclosure laws are very strict and they require each spouse to keep the other informed of all facts affecting the spouse’s finances, until the time when all assets and liabilities are divided, either through settlement or at trial. If one spouse tries to conceal assets or makes misrepresentations in his or her disclosure documents, the court may impose strict sanctions.
Once all of the assets are accounted for, the next step is to make sure they are divided appropriately. California is a community property state. This means that all assets acquired during the marriage are presumed to be community property, equally owned by both spouses. This is true even if one party is primarily responsible for managing the assets or is operating a business. Even if the asset or a business was started by one spouse before the marriage, the community and the other spouse are likely to have an interest in that business.
Different types of property require different methods for determining their value at the time of the divorce. Your attorney will work with you to achieve an equitable division of your marital assets. If a small business, or shares of a larger company, are involved, you may require assistance of a forensic accountant. These are trained financial professionals, usually CPA’s, who specialize in investigating and analyzing financial matters in divorce cases. A forensic accountant will assist you in gathering information and ensuring that the assets are properly valued and divided between the parties. A good forensic accountant can be instrumental in providing expertise and in helping the parties reach a settlement once all necessary information is ascertained.
By Alex Grager
This FAQ was first published in Divorce Magazine and is reprinted with their permission.