It happens all the time: one spouse strategically times or plans for a divorce so that the other party is at a disadvantage. What can you do?
Generally, judges don’t look favorably on people who seek to exploit an unfair advantage. In some cases, an unfair situation can be corrected. Just take a look at some of the examples, below.
Wife Undervalues House
In one case, the wife was a realtor. The couple decides that she will keep the house, and, based on her professional estimate of the house’s worth, they split up their assets and debts accordingly.
As it turned out, the wife was approached by a couple in the housing market who offered to buy the house for $150,000 over the amount she had quoted her husband in the divorce process. She quietly told the couple, “I’ll sell you the house, but you have to wait until after my divorce is finalized.” Her plan was to keep the extra $150,000 for herself.
Unfortunately for her, the husband caught wind of her scheme and took her back to Court after the divorce was finalized. The judge found that she had committed fraud by purposefully misrepresenting that the house was worth less, and ordered her to pay him $75,000 (half the difference in the house’s worth) plus his attorney’s fees.
Submitting a Financial Affidavit in Divorce
Hiding money or “accidentally” underestimating the value of a piece of property is not uncommon, especially during a contentious divorce when two people truly don’t get along and are determined to “win”.
As part of the divorce process, you will be required to submit a financial affidavit and attest under oath that it accurately represents your assets and earnings. Say you have already earned a bonus at work but haven’t been paid yet. If the bonus isn’t reflected on your financial affidavit it will likely be deemed fraud.
In fact, if the representations on your financial affidavit are inaccurate, the Court rules provide for a five-year period where the case can be reopened if any material misrepresentations or omissions are involved.
I heard of one case where a woman transferred funds to her cousin before the divorce process began. Once the divorce was finalized, her cousin transferred the funds back. Unfortunately for the woman, her cousin wasn’t too smart, and the whole plan fell apart when the cousin asked the husband, “Did you get the check I sent?”
The Court Wants to be Fair
In general, the Courts want to be fair to both parties in a divorce case. If there’s an honest mistake in a financial affidavit, it will be rectified when it is discovered. Most divorce agreements will have a provision stating that the values are estimates and it’s difficult to say exactly what property is worth. However, if you sell your business for half a million dollars more than you attested it was worth, there will be some issues if your spouse finds out (and potential consequences for you).
If you suspect that your spouse strategically planned for divorce in a way that is illegal, there are ways to rectify the situation. Call our office today at 303-449-1873 for a complimentary consultation and we’ll discuss how the process will work for you.