What can happen if a spouse hides or undervalues community assets?

When a spouse has hidden assets during divorce, it is not simply a bad idea. It is illegal. Understating the value of an asset is also illegal. Why would a spouse be tempted to do this? Sometimes spouses feel they will not get their fair share during property division. They mistakenly believe that hiding assets would solve the problem.

How does property division work in Texas?

Community property, also called marital property, is property that a couple owned in common during their marriage. Examples are income, a family home, family vehicles, joint investments, retirement accounts, other property acquired during the marriage, etc.

Texas is a community property state. During divorce, the court divides community property between spouses according to what it considers to be fair. This does not necessarily result in a 50/50 division.

Divorce lawyers can trace hidden assets and determine whether assets are being undervalued

Especially with today’s advancements in technology, divorce lawyers can trace hidden assets without much trouble. Some ways that a spouse may hide assets include:

  • Having family members or friends hold assets in their names
  • Using offshore bank accounts
  • Through digital currency like Bitcoin
  • Putting assets in a safety deposit box

The Texas Family Code

The Texas Family Code, Sec. 7.009 describes activities such as hiding assets or undervaluing assets as “fraud on the community.”

When the court discovers that fraud on the community has occurred, it does the following:

  • Calculates the value by which the community estate was depleted due to fraud
  • Calculates the actual value of the estate (reconstituted estate)
  • Divides the value of the estate between the parties in the manner the court deems just and right
  • Awards the wronged spouse an appropriate share of the community estate
  • Against the spouse who committed the fraud, the court awards a money judgment in favor of the wronged spouse
  • Awards to the wronged spouse both a money judgment and an appropriate share of the community estate

If you suspect your spouse is hiding assets during divorce, our attorneys at Richardson Brown can advise and help you protect your rights.

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