Going through a divorce can be a long and drawn-out process, even if it is an amicable divorce with cooperating parties. However, it is also inevitable in life that some relationships end on bad terms. When a marriage with your spouse ends unfavorably, there can often be challenges regarding property division, alimony, and establishing child custody/support.
In some instances, a party in a divorce may choose to take a less honest approach and attempt to hide assets to prevent their fair division. When a contested marriage goes to court, it is the judge’s job to allow a spouse to be able to enjoy the comforts of life they enjoyed during the marriage, as reasonably as they can. If one party is hiding assets, this can hinder and disrupt the process. It may also lead to significant consequences.
Here are some thoughts to keep in mind if you suspect your spouse or soon-to-be ex-spouse is hiding assets in the midst of your divorce process.
Discovery and Depositions
There is a legal process known as “discovery.” This is a pre-trial process in which both parties share evidence. Typically, this is when financial statements such as proof of income, insurance, and so on are shared with the opposing counsel. Lying or being deceptive in any way during discovery is a criminal offense. However, there can be certain circumstances in which an opposing attorney can object to the production of discovery.
For example, if one attorney asks the other attorney to produce information about their conversations with their client, that will almost certainly be quashed due to attorney-client privilege. However, if one attorney asks the other attorney to produce their client’s income statements for any side jobs that may not have previously been listed in financial statements, that information must generally be produced.
During the early stages of your divorce, it is important to provide any documentation and proof of income from both you and your spouse to your attorney. If you are aware that your spouse has side jobs or has hidden assets, you should discuss this with your attorney. As a result, your attorney will know more specifically what to request when they make their discovery request. If your spouse continues to hide assets or lie in their discovery, and you have significant amounts of evidence, the situation may rise to a criminal offense if it is not remedied.
Another stage of the divorce process may involve depositions. Attorneys use depositions to gather testimony under oath without entering a courtroom and getting testimony in front of a judge. Depositions are typically more informal than a regular court hearing and are used as a means to gather information.
One such example is if you believe your spouse is intentionally reducing their income at work and you suspect their boss may be in on it. Your spouse may ask their boss to withhold bonuses until after the divorce is finalized, or to temporarily reduce hours. This tactic can cause problems when the court is attempting to calculate a base amount for alimony and child support; however, the court does have methods to counteract that tactic. Regardless, if in this example your spouse’s boss is deposed, they will have to provide that information about how they are reducing your spouse’s income. Intentionally lying in a deposition may rise to the level of perjury, and if you have substantial evidence that proves the deponent is lying it is advisable you share it with your attorney.
The deposition and discovery phase are critical milestones in any proceeding. As it relates to a contested divorce, these are the moments in which details may come forward about hidden assets. It is critical to work with your attorney and provide as much information and evidence as you can so they are adequately prepared to ask the right questions. It is also important to note that if you still have the ability early on, you should gather as much documentation and evidence of your spouse’s income and assets as possible. While operating on good faith is preferable, divorces can cause people to have a change of heart for the negative. This change of heart may lead to the absence of good faith efforts in providing documentation later on in the process.
For both Maryland and Washington D.C., the time limit for a deposition is seven hours. It is not often that courts grant leave to go beyond seven hours, or to perform multiple depositions.
Imputing Income
In a previously mentioned example, a spouse hiding income was discussed as an instance in which assets may be hidden. It was also mentioned that courts have a method to circumvent that tactic, which is known as imputing income.
It should be noted that if a person genuinely loses their job or suffers a legitimate setback, the court may find it reasonable to modify child support and alimony in their favor. However, if someone is intentionally and maliciously trying to lower their payments which the court has ordered, the judge may decide to impute their income. This is a process that requires the production of evidence to prove that an individual intentionally impoverished (often called voluntarily impoverishment) themselves.
A judge will look at a variety of factors such as their education and skill level, past trades or employment, previous support/alimony payments, and others. Any evidence produced may also support the judge in their determination as to whether or not they will impute income.
If a judge decides to impute income, it means the person will have to continue making payments at the current level despite their attempt to lower their responsibility. The ability to impute income is available to judges in both Washington D.C. and Maryland.
Contact the Law Offices of Thomas Stahl
At the Law Offices of Thomas Stahl, we have experience in navigating complicated divorces. These are processes that can become highly emotional and stressful, especially if another party is attempting to hide assets that can significantly change the outcome of a divorce proceeding. At the Law Offices of Thomas Stahl, we will work with you to make sure we get all the evidence we need, as well as the necessary information so we can promptly seek out any potentially hidden assets. Call us at (443) 331-2770 for a consultation.
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