Something clients often worry about is if their spouse is hiding assets during a divorce. What if one spouse has been moving funds into an account that the other spouse as no access to and no knowledge of? What if one spouse has been paying into employer-provided retirement accounts which the other spouse does not know about? What if one spouse refuses to provide documents showing accounts and other assets in the discovery process? Read on to learn more about your options if you think your spouse is hiding assets during your divorce proceedings.
- Injunctions
Depending on the county, when you file for divorce, you can also request a Temporary Restraining Order. This is not a restraining order in the sense that most people think of. This Temporary Restraining Order aims to preserve the status quo of the parties’ financial situation while the divorce is pending; this means parties are prevented from making major changes to the marital estate during the pendency of the case. Regarding property, the parties are typically ordered in the Temporary Restraining Order to not do things like: selling/transferring property of either party; withdrawing money from accounts; damaging property of either party, spending significant funds/purchasing things out of the ordinary; and destroying financial records/statements. In some counties, there are standing injunctions already in place from the second that a divorce case is filed. In these counties, you do not even have to request the Temporary Restraining Order because these injunctions are already in place to prevent the parties from hiding, moving, or selling property while the case is pending.
- The Discovery Process
During a divorce case, the discovery process is the manner in which the parties learn about the full picture of the parties’ property and the marital estate. You can ask your lawyer to draft discovery requests which will be served on your spouse; upon receipt, your spouse has thirty days to respond to all the discovery requests. The discovery requests which are most helpful in learning about what property the other spouse holds are written interrogatories and requests for production and inspection. Written interrogatories ask a party to provide information. For example, a written interrogatory might ask a party to list all of that party’s financial accounts or real property (real estate). Requests for production and inspection ask a party to provide all relevant documents in response to certain request. For example, a request for production might ask a party to provide all monthly statements for any brokerage or investment accounts in that party’s name or control for the last five years.
Another discovery tool, less commonly used in family law cases but which can still be very useful, is a deposition. During a deposition, your attorney asks questions to your spouse (or another witness) under oath. This is a chance for your attorney to ask questions and learn more about what property your spouse has or holds for the community estate.
When your spouse provides information and documents regarding their property and assets, it affords you a clear picture of what property needs to be divided at the end of your case. When your attorney receives the responses to your discovery requests, your attorney should do an extensive and detailed review of all information and documents. This is one of the best ways to learn if your spouse has been transferring funds to accounts which you might not know about or spending money to maintain other assets (like real property) that you were not aware of. In addition, your attorney can use a request for production to obtain your spouse’s paystubs. From paystubs, your attorney can determine what employment benefits your spouse is contributing to, including retirement accounts, pensions, and health savings accounts, and what your spouse is receiving, including salary payments and bonuses. A thorough review of discovery responses is an effective way to learn about assets that you might not otherwise know about.
- Deficiency Letters and Motions to Compel
What if your spouse fails to respond at all to discovery requests? In that instance, your attorney can draft a discovery deficiency letter. This letter informs your spouse (or their attorney) that they have failed to respond to discovery requests within the thirty-day deadline, and if they fail to provide responses within an additional time period (usually something like ten days), then your attorney will be forced to file a motion to compel with the Court. A motion to compel asks the Court to force your spouse to provide the information and documents that you have requested. In addition, you can ask in your motion to compel that the Court order your spouse to pay for your attorney’s fees in connection with having to bring the motion to compel.
What if your spouse fails to provide all the documents or information you requested in their discovery responses? For example, imagine that your spouse provides the monthly statements for their checking account in response to your request for production. While reviewing those monthly statements, your attorney finds multiple transfers to a Fidelity investment account from the checking account. You had no idea that this Fidelity investment account existed, and your spouse failed to provide any monthly statements for this Fidelity investment account. Your attorney can draft a discovery deficiency letter. This letter informs your spouse (or their lawyer) that they have failed to respond to discovery requests as completely as required, and they need to provide all requested information and documents within another specified time period (usually something like ten days). This letter states that if your spouse fails to respond as directed, your attorney will be forced to file a motion to compel with the Court. In addition, you can ask in your motion to compel that the Court order your spouse to pay for your attorney’s fees in connection with having to bring the motion to compel.
- Third Party Subpoenas
If your attorney discovers accounts or assets in their review of your spouse’s discovery responses, but your spouse refuses to provide information or documents regarding those accounts or assets, your attorney can issue third party subpoenas. A third-party subpoena is sent to a third-party, not your spouse. The subpoena lists out the kind of information that you are seeking and forces the third party to provide any responsive documents or information.
For example, imagine that based on review of your spouse’s paystubs, it is clear that your spouse has a pension through the Teacher’s Retirement System (TRS) in Texas. But, your spouse has provided no documents regarding their pension. In such a case, your attorney could issue a third-party subpoena directly to TRS to obtain documents about the pension. The third-party subpoena is another tool your attorney can use to learn about what property your spouse controls or owns without needing to rely on your spouse’s participation (as in the discovery process).
It is important to know that the third-party being issued the subpoena can file a motion to quash the subpoena so that they do not have to provide the information and documents. However, your attorney can set a hearing with the Court to explain that your spouse has not been forthcoming with the documents to demonstrate why the third-party subpoena was necessary in the first place.
- Forensic Accounts
One way to trace funds is to employ a forensic accountant. Forensic accountants are financial experts who investigate and analyze financial records to help resolve complex financial matters. They trace assets, identify discrepancies, appraise assets like stocks, locate hidden assets, evaluate income, and asses the value of property or businesses.
All of these tools can help you uncover the full financial picture of your marital estate if you believe that your spouse is hiding assets. To learn more about the discovery process in a divorce case, consult with one of our attorneys.