Financial Misconduct by a Spouse Here Are 3 Common Types of Misconduct We See

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Divorces are almost always quite complex by nature. The two most contentious divorce points are child custody and property division. In high-asset divorces, there is often a significant temptation from one or more spouses to commit some level of financial misconduct. When everything is at stake, the temptation to hide some of it in a “secret” account that the soon-to-be-ex doesn’t know about is pretty significant. As such, sadly, financial misconduct by a spouse is relatively common in the divorce process. Here are the three most common types of misconduct that any California divorce attorney will see.

What Is Financial Misconduct?

 It’s worth defining this concept before discussing the three types divorce attorneys most frequently see. Any assets and debts that either party obtains during the marriage are considered community property within the state of California. These belong to both spouses equally.

When one spouse unfairly conceals, wastes, or manipulates those assets to gain an advantage during the divorce proceedings, we call it financial misconduct.

What Are the Three Most Common Types of Misconduct?

If you’re currently going through the divorce process (or expect to be soon), you should know the most common types of misconduct so that you and your attorney can spot them if they arise.

The three most common types are the following.

1. Hidden Assets

 Hiding assets is arguably the most common financial misconduct by a spouse. A spouse hides assets when they transfer them to secret accounts, understates the value of businesses, artwork, crypto, and more, makes “gifts” to friends and family, or willfully conceals income.

These actions can significantly impact the divorce proceedings. Without a clear and accurate financial picture, the computations of child support, alimony, and the asset division judgment will be inaccurate. Everything in a divorce relies on accurate information about financial situations.

2. Dissipation of Assets

 One party often wastes marital assets on expenses unrelated to the marriage. For example, one spouse could “dissipate” assets by funding excessive gambling trips, overspending on luxurious things (like unnecessarily buying a Bentley to try to have fewer assets to divide 50-50), or supporting extramarital relationships. Please note that California has no divorce penalties for outside affairs. Still, courts can hit that party with unfairly dissipating marital assets if the court believes that you have been incorrectly “transferring” marital funds to an outside romance.

3. Inaccurate Financial Disclosures

Last but not least are the venerable inaccurate financial disclosures (and this is one of the most common overall acts of financial misconduct by a spouse). During the divorce process, both parties have a fiduciary duty to provide complete and honest financial disclosures. However, one party might decide to willfully fail to disclose certain assets in the hopes that the other party will never know about them. These inaccurate disclosures make all subsequent calculations incorrect since those original faulty numbers drove them.

Speak with an Attorney If You Suspect Financial Misconduct By a Spouse

If you suspect financial misconduct, please consult with us! Call (408) 560-4487 or complete our secure online form to schedule a case evaluation as soon as possible!

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