Facing divorce is an emotionally distressing and legally complex prospect. It can also quickly become contentious when one or both spouses become defensive over assets to which they feel they are entitled or wish to prevent a spouse from keeping during the separation of assets required by Colorado divorce law.
While this is a common reaction to divorce, if the urge to protect assets leads to hiding assets in a Colorado divorce, there can be adverse consequences, including the other spouse being awarded a greater portion of marital assets.
In some cases, hiding or dissipating assets during a divorce also has significant criminal repercussions, such as contempt of court charges or charges of criminal fraud. Discuss your unique case with our proven divorce attorney in Denver today at (303) 451-0300.
What Does Colorado Law Require During Asset Division In a Divorce?
Some states are “community property states” requiring a 50/50 division of marital assets. In Colorado, divorce law requires spouses to divide all property acquired during the marriage in a way that’s “fair and equitable,” if not exactly 50/50.
The least contentious way to arrive at a fair division is for both spouses to be able to communicate and compromise effectively, often with the help of a professional mediator. Unfortunately, this isn’t always the way divorces play out.
In Colorado, spouses may retain their separate assets. Separate assets are those that belonged solely to one spouse before the marriage. Any assets gifted to one spouse during the marriage, or inherited by a spouse, are also separate assets that are not subject to division.
Any assets accumulated during the marriage require fair division. In many cases, one spouse may claim a share of the other’s separate assets due to co-mingling, a common phenomenon that occurs in most marriages.
For example, if one spouse owns a home before the marriage, but the other spouse improves the value of the home through their money, time, or talent, they have a right to claim a portion of the home’s improved value.
Understanding the Full Disclosure of Financial Assets During a Colorado Divorce
During the discovery period of a divorce, which occurs after one spouse petitions for divorce and the other responds, both spouses are required to make full financial disclosures, listing their assets, debts, income, and monthly expenses.
The spouses’ attorneys may request financial documents from the other spouse, who has a legal obligation to produce all requested documents before they begin negotiating the division of the couple’s marital assets.
When spouses aren’t able to reach a mutually acceptable settlement agreement on asset division, they must present their disputes to the court for a judge to decide.
Hiding Assets During Divorce In Colorado
It’s not uncommon for spouses to wish to retain specific assets or for one spouse to wish to prevent the other from obtaining what they view as more than their fair share. However, hiding assets isn’t an acceptable tactic. Common assets spouses attempt to hide include the following:
- Income, including from bonuses, commissions, rental properties, and interest from financial accounts
- Retirement accounts
- Investment and other financial accounts
- Cash, or assets converted to cash
- Jewelry, art, antiques, and collectibles
- Cryptocurrency
- Assets held in a trust
- Vehicles
When filing financial disclosures to the court, both spouses sign statements swearing that they’ve revealed all of their assets. By concealing assets or omitting them from the disclosure, a divorcing spouse commits perjury, a crime punishable in criminal court.
How Do Spouses Hide Assets During Divorce?
There are many ways motivated spouses hide or attempt to hide assets during the divorce process, including the following common tactics:
- Converting assets to cash and hiding the cash
- Hiding valuables in a storage unit
- Undervaluing their income or leaving off additional sources of income, such as commissions and bonuses
- Overstating living expenses
- Hiding investment account statements
- Buying expensive items and then listing them as valued at less than their true worth
- Overpaying taxes and then applying the overpayment to the next year’s taxes
- Transferring assets to cryptocurrency and other digital assets that are easily hidden and impenetrable
- Making arrangements with friends and family members to loan them money or repay alleged loans, with their agreement to return the money after the finalization of the divorce
- Opening accounts in another jurisdiction
- Transferring funds to offshore accounts
- Postponing raises, commissions, and bonuses until after the divorce finalization
- Vacating rental properties to reduce income
Dissipating Marital Assets
Once the divorce process has begun, Colorado divorce law prohibits the intentional dissipation of assets unless both spouses agree to a financial action. Though spouses can spend funds on their normal living expenses, they cannot spend recklessly with the intention of disposing of their assets to intentionally prevent their spouse from obtaining their share. Some methods divorcing spouses use to dissipate assets include the following:
- Gambling with large sums of money
- Taking expensive trips
- Buying expensive gifts for a new relationship
- Selling off property at a loss
- Placing marital assets in a trust for another family member
Hiding assets and dissipating assets during a divorce constitutes a violation of the legal obligation to disclose the full value of assets during the divorce process and adversely impacts the court’s requirement for fair and equitable asset division.
How Do You Uncover a Spouse’s Hidden Assets During a Divorce In Colorado?
The state’s requirement for an equitable division of assets is difficult to meet when one spouse hides assets. When one spouse suspects the other of hiding assets, it’s essential to take action. First, inform your divorce attorney about your suspicions and utilize available tools, such as examining financial documents and reviewing online credit reports.
A divorce attorney can subpoena any specific documents required to reveal discrepancies and other evidence of a spouse’s hidden assets. In many cases, an attorney also deposes eyewitnesses, such as business partners. Hiring a forensic accountant to identify and track hidden funds sometimes becomes necessary during contentious divorces in Colorado.
What Are the Consequences of Hiding Assets During a Colorado Divorce?
Under the Colorado Rules of Civil Procedure, if a spouse hides or dissipates assets during the divorce process, there are both financial and legal consequences. In many cases, a judge decides to correct the attempt by awarding additional assets to the other spouse. Depending on the significance of the value of the hidden or dissipated assets, the court may charge the spouse with perjury and contempt of court. Contact our skilled family lawyers in Denver for a free consultation today.