Hiding assets is one of the most common concerns our clients have when going through separation and divorce. Separating couples sometimes go to great lengths to hide income, assets and superannuation from their ex partner.
This is despite the fact that until a property settlement agreement is formalised, parties have a duty to provide full and frank disclosure to the other, on an ongoing basis, in relation to their assets and financial circumstances.
Check out the following articles addressing your duty to disclose and the consequences of failing to disclose:
This article explores the most common strategies for hiding assets and finding assets when going through separation and divorce.
Common Strategies for hiding assets
Common strategies used by parties to hide assets and to avoid showing capacity to pay more spousal maintenance, include:
- Opening secret bank accounts and failing to disclose them;
- Giving money/depositing money to a new partner’s bank account;
- Selling assets for cash and not depositing the income into a bank account;
- Depositing money into children’s accounts or trusts;
- Deferring a salary increase or bonus payments;
- Opening a new business and investing money in a new business / transferring assets from the old business to the new business;
- Transferring an asset to a partner’s name/family member’s name/business partner’s name for no value or for ‘mates rates’ with the understanding that the asset will be returned at a later date and cash exchanged given back;
- Transferring cash to another person e.g. partner/family member or paying ‘bills’ that don’t exist;
- Overpaying credit cards or tax liabilities;
- Buying expensive items that may be overlooked;
- Depositing money into overseas bank accounts and failing to disclose them;
- Declaring bankruptcy;
- Burying cash and not depositing it into a bank account so it cannot be traced;
- Hiding assets so they cannot be valued and claiming they have been sold/disposed of;
- Withdrawing large sums of cash for ‘expenses’ in order to stockpile money;
- Minimising the business income by having clients pay in cash or in exchange for other benefits, for example, drugs;
- Taking a ‘personal loan’ from a family member or the bank, in order to increase your liabilities.
My spouse is hiding assets and income – how do I uncover them?
It is especially difficult to search and locate hidden assets and income where one spouse does not know anything about his/her former partner’s financial situation, in which case, it is hard to know what to look for.
This is why it is extremely important to hire an experienced family lawyer to help you to review bank statements and financial statements to make sure there are no hidden assets or financial resources, in order to help you to achieve the best possible outcome in your case.
The best strategies that can be utilised by you to uncover when your former partner is hiding assets and/or income are set out below:
Scrutinise the Financial Statement and Bank Accounts
A financial statement must be filed by each party in a financial proceeding which shows all assets, liabilities and superannuation in that person’s name, as well as all income received by that person and all expenses paid by them.
The Financial Statement is a very useful document which should be scrutinised thoroughly and you can then ask questions and seek further disclosure from your former partner who has signed the financial statement, in order to reveal hidden income/assets.
Things to look out for in the financial statement are:
- Has the gross or net income been included?
- Does the gross income include superannuation or exclude it?
- If it includes superannuation, have superannuation contributions been included in the statement? It is important to pay attention to whether the ‘gross’ income included in the financial statement is such that the superannuation contribution is deducted prior to that amount, as if superannuation contributions have been deducted prior to the income, then it should not be listed as an expense on the financial statement;
- Are the expenses reasonable or exorbitant? You can ask for disclosure of any expenses included in the financial statement;
- Does the financial statement reveal an asset or loan not disclosed? Ask for disclosure of it;
Bank accounts can also be quite revealing when properly is scrutinised in relation to hidden assets/capacity to pay maintenance. Look out for:
- large cash withdrawals;
- transfers to/from bank accounts that have not been disclosed;
- transfers to bank accounts belonging to friends/family/new partner;
- Payment of alleged expenses that are not included in the financial statement;
- No transfers for payment of expenses that are included in the financial statement.
Hire a private investigator
A private investigator can review special databases, public records, computer records, or conduct surveillance to determine whether there are hidden assets/finances.
Hire a forensic accountant
A forensic accountant can assist you to interpret financial statements, trace money, ascertain the true financial position of a party and whether they may be hiding any of their finances.
The duty of full and frank disclosure extends to documents in your possession and/or control. This means that even if your former partner no longer has the documents in their possession, they are required to disclose them, if they have the capacity, upon request, to access the documents.
If your former partner is failing to disclose documents, or claims that the documents are not within their control, you can issue subpoenas to non-parties such as banks, employers, or other third parties who may have records relating to your former spouse, which reveal any hidden assets or financial resources.
Obtain an Anton Pillar order
If you are concerned that your former partner may destroy evidence in their possession that proves that they are hiding assets, you may apply to the Court for an Anton Pillar Order.
If such an order is made by the Court, an authorised representative for you can enter your spouse’s premises and take possession of potential evidence that relates to the dispute, to avoid it being destroyed;
The requirements for the making of an Anton Pillar Order are very strict. You should speak to one of our experienced brisbane family lawyers about whether you can obtain an Anton Pillar Order in the circumstances of your case.
Notice to Answer specific questions
If you are not satisfied with your former partner’s disclosure, you can interrogate them about certain issues (known as ‘interrogatories’) by serving them with a notice in writing in the form of Answers to specific questions.
The Family Law Rules provide that you can only make such a request once, and you can ask up to 20 questions, so it is important to choose your questions wisely, and which are directly relevant to the issues in dispute.
Your former partner is then required to answer those questions fully and frankly in an Affidavit that is filed and served on each person to the proceedings within twenty-one days after the request was served.
Apply for superannuation information
Superannuation is often one of the most valuable assets in a property settlement besides the family home.
Check out our page on Superannuation Splitting for more information on this topic.
If you are currently negotiating a property settlement, you can apply for information in relation to the current balance of your former partner’s superannuation fund, by completing a Form 6, Superannuation Information Request (SIF).
Check out the superannuation information kit to access the form you need to complete to access information in relation to your former partner’s super.
The difficulty with such an application, is you first need to know the name of the superannuation fund in which your former partner has an interest.
Where you are a party to a property settlement proceeding, new laws recently passed now allow the Australian Taxation office, upon application of a party, to provide details of superannuation accounts held by the ATO in relation to the other party.
The application must be made in the approved Superannuation Information Request form online, using the Commonwealth Courts Portal.
Check out the Visibility of superannuation for property settlement proceedings page which provides information on how you make a superannuation information request from the ATO, when your matter is in court.
A response to the request should generally be available on the Commonwealth Courts portal within 7 days of the request being made.
The response to the request will be a letter from the ATO to the Court advising the balance of the other party’s Australian super fund, if one exists.
File an application that your former spouse be found in contempt of court
In all financial proceedings, it is now a requirement that prior to the first court event, each party file an undertaking that they understand and have complied with their duty of full and frank disclosure under the Family Law Rules.
A written undertaking is a promise to the court and has the same/similar affect to a court order, and it must be complied with.
Breach of an undertaking is essentially breach of a Court Order. If your former partner has breached an undertaking, you can apply to the Court that your former partner be held in contempt of Court.
A finding that a person is in contempt of court is a very serious finding, made in very limited circumstances, which could result in consequences such as costs orders or even imprisonment.
What are the consequences of hiding assets and failing to disclose?
If a party deliberately hides assets from their former partner there are various ways to bring their conduct to light as stated above.
If the matter is in court, it is more likely than not that a party will be found out if they have been hiding assets by, for example, the issuance of subpoenas to get information directly from the bank or another third party.
If you fail to comply with your duty of disclosure, or the other party does, the court may make a costs order against you. This means you may be required to pay the other party’s legal costs of the family law case.
In more extreme cases, the Court may hold you in contempt of court in which case you could even face a term of imprisonment.
If an asset is disposed of during proceedings by you, in limited circumstances the Court may notionally add back the asset to the property pool of the person who failed to disclose them or otherwise, making an adjustment in favour of the other party as a result of the conduct of the disposing party, which has resulted in the property pool being reduced. This will result in a deduction of the settlement received by the party who has disposed of the asset.
If final orders have been made and it is discovered by the other party that you have failed to provide full and frank disclosure to the other party of your assets prior to the orders being made, and the non-disclosure is of such significance that it would have been relevant to the outcome, there may be grounds for the other party to apply to have those orders varied or set aside and new orders made.
Furthermore, if you fail to provide full and frank disclosure in relation to your assets and income, and the Court makes findings that you have hidden assets and failed to disclose, the Court can draw negative inferences against you at a Trial in relation to your ownership of assets or your credibility of a witness, which will negatively impact the outcome of your case.
Is your ex hiding assets? Contact us
The best thing you can do to avoid your former partner being able to hide assets, is to keep informed during your relationship in relation to your assets and to have a general understanding of how your finances operate.
Post separation, we recommend obtaining prompt legal advice from one of our experienced brisbane family lawyers, before things hit the fan, as prevention is better than cure, when it comes to preserving your rights and entitlements.
The clients who come to us prior to separation or at the point when they are separating, are the ones we can give the most valuable advice, strategies and tips, so as to preserve the property pool and avoid the other party unilaterally disposing of matrimonial assets, without your knowledge or consent.
Contact us to book a reduced rate initial consultation with one of our Brisbane Family Lawyers, and we will give you invaluable advice, so that you can make smart decisions following separation, to preserve your rights and entitlements.