In New York State, during the divorce process, spouses have a fiduciary duty to each other to disclose all of their assets in order to ensure proper division of the parties assets and liabilities known as Equitable Distribution. What does “fiduciary duty” mean? Having a fiduciary duty means that you are working in good faith for the best interests of the party you have a responsibility for.
This may seem like an odd thing during a divorce. A divorce is an adversarial process in which each spouse is attempting to get the best possible end result for themselves. Having a fiduciary duty does not mean you have to sacrifice anything. It does not mean you have to give up parenting time or give additional money. The duty lies in the area of disclosure and discovery. Each spouse has a duty to report all assets that they own. This includes money, investments, businesses, real estate or any other items of value including things such as an art collection or other valuable possessions.
Hidden assets are not always assets that are currently owned. A form of hidden asset is to either sell off assets to third party, move assets off-shore, or even to cash out of the asset and spend the money on things like vacations. It goes against the spousal fiduciary responsibility to go on a spending spree in order lower your bottom line. It is also against that responsibility to take your everyday expenses and charge them to a business to hide the expenses. In regards to a business, if the business is one that deals with cash, it is not only an issue with the divorce to hide cash by not reporting income, it is a form of tax fraud and evasion that can lead to other legal issues.
As discussed in the blog post about Equitable Distribution, in New York State, equitable does not necessarily mean equal, but rather it means fair. A final agreement cannot be fair if all of the assets are not fully disclosed during the process of discovery.
Even if a divorce is final, if it is found out after the fact that assets were hidden, then we can bring contempt of court charges, or a motion to vacate the judgement and reopen the case. During the process of divorce, there are also options in order to make sure there are no hidden assets. We employ investigators such as forensic accountants to make sure the documents we receive tell a complete story. If there is a question of whether or not your spouse is hiding assets, we will do a deep dive into the accounting to make sure all of the assets are properly accounted for. We also employ private investigators to find evidence of other forms of assets. If your spouse has just decided that the best way to deal with the issue of divorce and hiding assets is to disappear, we also work with “skip tracers” to track people down along with the assets that are not being reported.
Even under the best conditions, a divorce is a stressful time. Your life is in a state of flux, your kids are dealing with their parents not being together, and in addition you might be dealing with moving to a new house, town, and school district. Dealing with a spouse who is not being truthful about assets can just make a stressful situation unbearable.
Anthony LoPresti has been a member of the New York Bar, the US District Court Southern District of New York and the US District Court Eastern District of New York since 1988 with a primary focus on Family Law. If you are looking to begin or have already started the process of divorce and you believe your spouse is either hiding assets, even planning on skipping town to avoid a confrontation, call Anthony at 516-252-0223 for a free one hour consultation.