Transferring Assets Improperly During a Divorce – Links
I have been practicing law for over 26 years and have seen just about every situation on this subject that I care to see. You should not give away marital assets to anyone prior to filing a divorce. Period. Not a good idea. It will all be traced right back to you. Do not try to cheat your spouse out of what is already hers. (Mr. Robert Jason de Groot)
“The State of Hawaii” is no-fault, both in the sense of you don’t have to prove that someone did something wrong to get the divorce itself but also in the sense that past conduct during the marriage is almost entirely irrelevant in the applications of the rules that we have for both property division, also support. If a spouse gives assets away in contemplation of divorce, or acts in a fiscal irresponsible manner during the time of the divorce, he or she may be charged for it in the divorce property division. Otherwise, marital fault of pretty much every kind is irrelevant in property division. In rare cases the Family Court will equitably deviate and give a lower order or otherwise disadvantaged spouse more than fifty percent of the marital estate, but in the vast majority of instances the division will be fifty-fifty.
If the property was purchased during the course of the marriage, any sale of it would be looked at closely by a divorce court. It is highly likely that your fiance would have to pay his wife 1/2 of the fair market value of the equity in the property or these monies would be taken from other assets of the parties. (Scott R. Jay, Esq.)
https://www.newjerseydivorcelawyerblog.net/can-transfer-dispose-property-divorcing/
You might therefore think it’s OK to sweep an asset under the carpet in advance of filing for divorce, before the court takes jurisdiction. This can be a bad idea for a number of reasons.
The court can take the position that the action you took, either disposing of or transferring a marital asset, was done in contemplation of your divorce if the asset is later discovered. You were “divorce planning.” Even if the asset disappeared before you filed, the court can bring it right back into the marital pot for distribution, and the distribution may not be to your liking. In Rossi v. Rossi, a somewhat notorious California case, the wife purchased a winning lottery ticket worth $1.3 million and filed for divorce less than two weeks later. She tucked the money aside without telling her spouse or the court about it. The court awarded the entire $1.3 million to Thomas Rossi due to what the judge saw as Denise Rossi’s duplicity.
Of course, two weeks is a short period of time. Many states take the position that the timing of such an action is pivotal. Property disposed of five years ago when your marriage was healthy may not create much of a stir. New Jersey courts tend to base the decision on whether your marriage was already in the process of breaking down at the point that you concealed the asset or assets. In other words, it’s not so much a matter of when you transfer or dispose of property, but rather, the state of your marriage at the time.
The Rossi decision was somewhat extreme, but it establishes that some states will award the entire value of an undisclosed asset to the innocent spouse if the other attempts to remove the property from the marital estate so its value cannot be shared in a divorce. New Jersey law more or less gives judges discretion to handle such situations in whatever way they feel is equitable and just.
Depending on your state, the burden of proof may be on you to prove that the action you took was innocent, or it may fall to your spouse to establish that you intentionally attempted to take the asset out of the proceedings. At the least, the court may adjust property division if the hidden asset comes to light. Your spouse had a legal right to a share in it if it disappeared without her agreement or consent, even if the asset no longer exists.
https://islandlawyers.com/divorce-property-division-hawaii/
MARITAL SEPARATE PROPERTY AND MARITAL PARTNERSHIP PROPERTY
In a divorce, the Court is first classifying the couple’s property into two classifications: Marital Separate Property and Marital Partnership Property. Marital Separate Property: Hawaii case law spells out Marital Separate Property as being “property owned by one or both of the spouses at the time of the divorce:
- a. All property that was excluded from the marital partnership by an agreement in conformity with the Hawai’i Uniform Premarital Agreement Act (HUPAA), HRS chapter 572D
- b. All property that was excluded from the marital partnership by a valid contract and
- c. All property that (1) was acquired by the spouse-owner during the marriage by gift or inheritance, (2) was expressly classified by the donee/heir-spouse-owner as his or her separate property, and (3) after acquisition, was maintained by itself and/or sources other than one or both of the spouses and funded by sources other than marital partnership income or property.”
Note that Marital Separate Property is not very common, with most property falling into one of the Marital Partnership Property categories (below).
Marital Partnership Property: “All property that is not Marital Separate Property.”The vast majority of assets in divorces is Marital Partnership Property, as Marital Separate Property, as noted above is considerably more unusual. Marital Partnership Property is then broken up into five categories:
- Category 1: value of all property owned by either party as of the date of the marriage, excluding the value of any gifts from one spouse to the other;
- Category 2: the increase in value of Category 1, from the date of marriage until the conclusion of the divorce;
- Category 3: value of all property separately acquired during the marriage by gift or inheritance to one of the parties, the value being calculated as of the date the gift or inheritance was received, excluding the value of any gifts from one spouse to the other;
- Category 4: the increase in value of Category 3, from date the gift or inheritance was received until the conclusion of the divorce; and
- Category 5: value of all property of either party at the conclusion of the divorce, excluding Categories 1, 2, 3, and 4.
A standard property division will award each party their own Category 1 and Category 3 values off the top, with the parties equally dividing Category 2, Category 4, and Category 5. The Family Court may rule to not divide Categories 2, 4, and 5 equally, if there are equitable considerations that justify deviation from 50/50. This deviation from 50/50 division of property is not common however, with an equal division of Categories 2 (increase in premarital property), 4 (increase in gift/inheritance property), and 5 (present property excluding Categories 1, 2, 3, and 4) being the standard.
Why You Shouldn’t Hide Assets – It Can Amount to a Crime and You’ll Probably Get Caught
There’s a chance you’ll get away with hiding assets to prevent them from being included in the community property or equitable distribution settlement. However, by hiding assets, you are taking a huge risk.
First, there is a legal process in all states called “discovery,” which is a way for divorcing spouses to gather information from each other and third parties, including banks, companies, employers, 401(k) plan administrators and the like. During discovery, you (and third parties) will be compelled to turn over relevant financial information to your spouse (or your spouse’s attorney). You’ll likely be deposed, which means you’ll have to provide live testimony, under oath, about assets and property. If you lie during discovery or your deposition in order to hide assets, you’ve committed perjury (a punishable crime). If your lies are discovered by your spouse, your spouse’s attorney, or a judge, you may face severe sanctions (monetary fines) or a perjury charge.
Likewise, if you simply fail to report assets or provide financial information to your spouse during a divorce, a court can order you to do so. If you defy the court when it, for example, orders you to share account balances and the location of money, you can be held in contempt of court, which can mean jail time.
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