Can a Spouse Hide Assets Before a Divorce in Illinois?
When a married couple splits up, one of the issues they may need to address includes dividing their marital property. However, some divorce cases in Illinois involve situations where one spouse attempts to conceal assets or income from their spouse or the court. But can a spouse legally hide assets during or in contemplation of divorce in Illinois?
Property Division in Illinois: The Basics
Illinois divides marital property during divorce under an equitable distribution system. The equitable distribution system requires spouses to divide their marital property, which typically includes all assets acquired by a couple during their marriage. Conversely, spouses may retain their separate property, which includes all assets acquired before marriage and certain assets acquired during marriage, such as inheritances or gifts received separately. Equitable distribution divides marital property fairly between spouses, though not necessarily equally, based on the court’s consideration of various factors.
Can You Legally Hide Assets?
Spouses may not lawfully hide assets during a divorce. Courts require spouses to provide complete and accurate financial disclosures to one another and to the court. A spouse who fails to disclose assets they own may face consequences for engaging in fraud or committing perjury.
Common Ways Spouses Try to Hide Assets
Some of the ways that spouses may try to hide assets from property division in divorce include:
- Transferring assets to third parties with the intent that those third parties will transfer the asset back to the spouse after the divorce
- Underreporting income
- Creating fake debts for a business owned by a spouse to reduce its income or value on paper
- Opening secret bank accounts and transferring funds to them from existing accounts
- Creating shell corporations or LLCs to shelter assets
- Transferring assets to offshore trusts
- Moving money into harder-to-trace assets, like cryptocurrency
How to Discover Hidden Assets
Spouses and courts may discover that a spouse has concealed assets due to various red flags that may appear during a divorce case. For example, a spouse may provide inconsistent information during discovery, including in documents produced or testimony during depositions. Other common red flags include:
- Sudden financial secrecy, including hiding bank or brokerage statements
- Discrepancies between a spouse’s reported income and their expenses or lifestyle
- Failure to disclose assets the spouse owned, with no sign that the spouse previously sold the asset
- Selling or transferring assets to mysterious third parties or holding companies
When spouses determine that their other spouse may have concealed assets, they may need to hire forensic accountants who have the skills to identify discrepancies in financial records and track down hidden assets or trace funds back to the marital estate.
Legal Consequences of Hiding Assets
Spouses who hide assets from their spouses and the courts may face various legal consequences for their actions. A court can penalize a spouse for concealing assets during a divorce case in several ways, such as:
- Awarding the hidden asset to the other spouse as part of the property division
- Imposing sanctions in the form of ordering a spouse who concealed assets to reimburse the other spouse for legal fees and forensic accountant expenses incurred to track down the hidden assets
- Holding a spouse in civil contempt for hiding assets
- Referring a spouse to prosecutors for potential perjury charges for providing false testimony or false information in a court document
Contact a Divorce Attorney Today
When you get divorced, you need experienced legal representation to help you protect your rights and interests if your spouse hides income or marital assets. Contact Gravel & Wechter today for a confidential consultation with a divorce lawyer to discuss your options when you notice signs that your spouse may have concealed assets before the start of your divorce case.