Spotting the Signs of Asset Hiding in an Arizona Divorce

Spotting the Signs of Asset Hiding in an Arizona Divorce

Ending a marriage is rarely an easy, distress-free process, but when divorcing spouses have significant assets, it may quickly become contentious and embittered. Arizona’s divorce process includes community property laws compelling both spouses to divide all property, assets, and debts acquired during the marriage equally and fairly. Unfortunately, during the animosity of divorce, some spouses hide assets from the court and from the other spouse in an effort to unfairly retain them rather than divide them.

If you suspect your spouse is hiding assets, it’s important to speak to a knowledgeable Phoenix divorce attorney with experience in the financial aspects of Arizona divorce. However, some spouses fail to pick up on the signs that a spouse is hiding or failing to disclose significant assets during the divorce process. There are signs of asset hiding in Arizona divorces that can help a divorcing spouse quickly identify and address the problem appropriately. Hiding assets in an Arizona divorce is more than just spiteful, it’s also a crime. Hiding assets is an obstructive behavior that prevents the accurate determination of assets for division.

Spotting the Signs of Asset Hiding in an Arizona Divorce

Understanding Separate vs. Community Property in Arizona 

The courts encourage divorcing spouses to make mutually agreeable settlement decisions for the distribution of the marital property outside of court, but for spouses with considerable or complex assets, this can be challenging—especially in contentious divorces when a spouse may seek to hide assets. Before beginning the process, spouses must accurately determine what assets are their separate assets that belong to them alone and which assets belong to the marital community and are subject to division. In Arizona:

  • Separate property includes any assets, accounts, debts, real estate property, cars, and valuables that belonged to one spouse alone before the marriage, and any assets inherited by them or gifted to them during the marriage
  • Community property or marital property includes all accounts, assets, debts, real estate property, cars, household items, electronics, antiques, collectibles, and artwork acquired by both spouses during the marriage 

In some cases, a spouse may also have a claim on the other spouse’s separate property due to the commingling of assets. For example, if one spouse grants the other spouse access to an account or one spouse spends time and money making improvements to the other spouse’s real estate property, they may have a valid claim on a portion of the commingled property.

When a spouse claims a property or asset is their separate property, they have the duty to prove that during the settlement process or in court.

What Are Hidden Assets in a Divorce?

When an attorney speaks of hidden assets in a divorce in Arizona, they’re referring to any asset, account, property, or valuable that one spouse fails to disclose during the divorce in order to keep it separate from the pool of community assets subject to equal distribution in the divorce settlement. A spouse’s hidden assets could be cash, bank accounts, investments, retirement accounts, valuables, real estate property, or business interests.

How Can I Tell If My Spouse is Hiding Assets?

Some signs that a spouse is hiding assets are obvious, but many spouses use subtle means that may go unnoticed by an unwary spouse. Some signs of asset hiding in an Arizona divorce include the following red flags:

  • An account with slowly diminishing funds
  • Changes in a spouse’s typical spending habits, including sudden or slowly building increases or decreases in spending
  • A spouse who suddenly ceases paying the bills
  • Bills and account statements that suddenly cease to arrive in the mail or in emails
  • A spouse making unusual loans or gifts to relatives and friends
  • A spouse making extravagant purchases
  • A spouse’s sudden investment in cryptocurrency
  • A spouse declares a sudden unexpected drop in income during the divorce
  • Your access to an account is suddenly blocked, the password has changed, or financial programs have been deleted from your computer
  • Inexplicable withdrawals appear from joint accounts
  • Discrepancies between tax documents and financial records and your spouse’s lifestyle

Any of the above signs could signal that your soon-to-be ex-spouse is engaged in hiding or disposing of assets that you could rightly claim for equal distribution during the divorce.

Under Arizona law, all divorcing spouses have the duty to fully disclose their financial information during the divorce. Failure to do so can result in criminal charges of perjury and other penalties.

Understanding Discovery in an Arizona Divorce

Arizona requires each spouse in a divorce to submit a full financial disclosure during the discovery period of the divorce process. During discovery, both spouses and their attorneys review the other spouse’s financial disclosure and may request further documents. The disclosures should include all assets, debts, income sources, and other relevant financial circumstances. During this process, a spouse attempting to hide assets might do any of the following:

  • Report a lower income or fail to report bonuses, overtime, or commission
  • Overstate their debts
  • Hide billing statements
  • Transfer assets to overseas accounts or cryptocurrency
  • Hide cash assets and valuables in a safe or safety deposit box

Some spouses ask their employers or contractors to defer payments, salary, commission, and bonuses until after the divorce is final in order to minimize the amount of income they disclose.

What to Do If You Suspect Asset-Hiding by a Spouse in an Arizona Divorce

Uncovering a spouse’s hidden assets is a complex process. If you suspect a spouse of hiding assets, it’s important to speak to your Arizona divorce attorney during the discovery process so your attorney can file motions to request appropriate documents. In high-asset divorces, your attorney may consult with a forensic accountant who specializes in uncovering hidden assets. Your attorney can also request an injunction from the court to freeze your spouse’s accounts to prevent them from transferring, concealing, or withdrawing assets until after discovery and the distribution of marital assets.

Penalties for Hiding Assets During a Divorce in Arizona

When a spouse purposely hides, conceals, transfers, or disposes of assets during divorce, they may face serious consequences. These could include the following:

  • Fines and penalties
  • An order to pay the other spouse’s legal fees
  • A judge’s decision to award more assets to your spouse
  • Criminal perjury charges with jail time upon conviction
  • Contempt of court charges

Hiding assets during an Arizona divorce is a fraud on the court. This is a serious offense in Arizona and can result in long-reaching consequences.