What happens when your spouse hides assets during a divorce?

Depending on your marital regime, going through a divorce may result in a division of your assets. But, for certain spouses, it may be tempting to hide assets so that they don’t have to share them.

We find out how to recognise when your spouse attempts to hide assets during a divorce, and we consider the legal implications of these actions.    

Tip: Do you have more liabilities than assets? Try debt consolidation.

How to recognise when your spouse is hiding assets

If you’re married in community of property, then you and your spouse share your estate, which means that you own everything together. However, during a divorce, you may become suspicious that some of your joint assets are being hidden by your spouse.

This can lead to serious legal action against them, and you need to make sure that you’re able to recognise this kind of behaviour so that you can put an end to it.

Tania Abbotts, attorney at Hammond Pole Attorneys, says that one way for a spouse to hide assets is to temporarily hand over the ownership thereof.

Changing ownership of assets

This can be done in the following ways:  

• The assets are put in the names of friends or family
• The assets are transferred to trusts or companies that were created for this purpose
• Fake sales agreements are concluded to show a change in ownership

By changing the ownership of an asset, your spouse will be able to exclude it from your divorce proceedings, while still having access to it in the future.

“Spouses can also avoid disclosing an asset during their divorce. Unless you have details about an asset, it can be difficult to locate. For example, your spouse may have created a secret savings account before your divorce is official,” says Abbotts.

She explains that another way of hiding an asset would be to utilise it or to transfer it into another asset.

Transfer of assets into something else

“Let’s say your spouse has R300,000 in savings. They can use this as a deposit to purchase a house, which is valued at R2 million, and obtain a mortgage bond to fund the purchase. The outstanding bond is greater than the value of the property, and thus, the R300,000 is no longer seen as an asset,” says Abbotts.

Four more ways in which spouses can hide assets are outlined by Abbotts below:

• They depreciate the value of the asset. They let immovable property become rundown; they refuse to tend to the garden or take care of general household maintenance, thus affecting the value of the asset.
• They try to undervalue the asset. For example, they could declare that their car is worth R25,000 while the trade-in value is, in fact, R45,000.
• They claim expenditure to be greater than it is. They can do this by adding expenses they did not ordinarily have.
• They invest excessively, or poorly, to reduce the joint net worth. Sometimes this is done by buying recreational equipment, such as a new golf cart, fishing boat, or caravan, which would have low resale value.

What are the legal consequences of hiding assets?

Abbotts says that, if assets were hidden due to lying under oath, then the guilty party can be convicted and fined for perjury – this means a criminal conviction.

“If the assets are hidden from a joint estate, the innocent party may apply for a forfeiture of the asset. This means that the guilty party will be penalised by having a percentage of the value, or the full value, of the asset taken away from them,” says Abbotts.

Your spouse may think that it’s harmless to stash away some of your joint assets during a divorce, but in doing so they risk losing them altogether – not to mention the possibility of facing criminal charges.

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