Divorce is a life-altering event. For many it is an emotionally charged situation. The person you had loved and intended to share a life with is now someone who you consider your “enemy” – viewing them from indifference to hatred. Any sense of trust has gone out the window. For some, notwithstanding the breakdown of the marriage, they sincerely want to resolve their marital issues amicably and in a fair and reasonable manner. However, for a significant number the raw emotions at the outset of the marital breakup seem to engender a need to “screw” the other person as much as possible. Depending upon your position in the relationship, you either want to “milk” the other spouse for all you can get, or want to pay the other as little as possible. One spouse may feel the need to “protect” one’s assets or income in some fashion from the claims of the other. One spouse may suspect that the other is hiding assets or diminishing income. In many cases, these feelings are borne out of the mistrust which exists and are not occurring in reality. However, in others these feelings or suspicions have some basis in fact. Claims of concealed or diminished income aside, this blog post will focus instead on concerns over the possibility of concealed or hidden assets in divorce, and provides a brief overview of what to look for and how to address them when such issues arise.
In divorce matters, New Jersey law provides for the equitable distribution of assets and property legally or beneficially acquired during the course of the parties’ marriage. In order to do so, marital assets first need to be identified, then they need to be valued, and after which they are to be distributed “equitably”. Unless the property was acquired by gift or inheritance from a third-party, it generally does not matter how or in whose name the assets or property was acquired if it was acquired during the marriage. Hence, if a divorce client suggests that because an asset or property is in his or her name alone the other spouse has no right to it or even to know about it, that person needs to be cleansed of that view right off the bat. Furthermore, if a divorce client tells his or her attorney about “secret assets”, the attorney/client privilege may not shield them from disclosure since the attorney code of ethics prohibits an attorney from facilitating a client engaging in fraudulent conduct or offering knowingly false testimony or statements under oath.
What if a divorce client suspects that his or her spouse has been secreting or hiding assets? Besides inquiring as to the basis for these suspicions, an attorney should obtain from the client their perception of the commencement date of any serious marital difficulties or their sense of when certain suspicious financial activity began, such as changes in the manner finances were being handled, records were maintained, or information shared. In most divorce cases, you usually ask for five years worth of financial records in discovery. However, if the suspicious financial activity has been ongoing for longer than five years, one should extend the time for which discovery is sought.