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Committing fraud when divorcing

On Behalf of | Oct 5, 2015 | Uncategorized

When a California couple decides to end their marriage, both parties typically want to feel financially secure and that they are getting a settlement they deserve. While wanting one’s fair share of joint assets is understandable, one partner sometimes tries to manipulate shared finances so that he or she can receive a disproportionate amount of assets. Concealing things from one spouse during a divorce is dangerous as it may constitute fraud.

If one divorcing spouse intentionally wastes joint property or money without the permission or knowledge of the other spouse, then a type of fraud called dissipation takes place. One partner might get rid of assets by transferring them to others, ruining personal items, spending excessively or selling assets for significantly less than their actual value. To uncover marital fraud, an accountant determines a couple’s real income and traces funds through accounts by following a paper trail.

Fraud is less likely for those without a significant income, but those who have more money or own a business have access to many hiding spots. A spouse could store money in expense accounts, safe deposit boxes, shell corporations, stock options or unfunded trusts and conveniently forget to disclose it. This is why an accountant must look through many records like business ledgers, retirement accounts, bank statements, tax returns and credit card statements to assess a couple’s financial claims.

California is a community property state, and thus a couple’s marital property will in general be divided equally between the parties by the court during the property division phase of divorce proceedings unless the couple can otherwise come to an agreement. A family law attorney can be instrumental in handling these types of negotiations on behalf of a divorcing client.