Divorce is stressful enough without the added worry of your spouse potentially depleting joint finances or hiding assets. If you suspect that your spouse may try to spend, move, or hide money during your divorce, it’s natural to feel anxious about protecting your financial future. Fortunately, Texas law provides several safeguards and legal tools to help prevent this from happening, and there are several steps that you can take to prevent your spouse from squandering or secretly moving assets during the divorce process.
1. Understand the Community Property System
Texas is a community property state, which means that most property and debts acquired during the marriage are considered joint property. In a divorce, both spouses are typically entitled to an equal share of community property. This includes income earned, real estate, retirement accounts, bank accounts, and investments acquired during the marriage.
Understanding how community property works can help you better assess your financial situation and prevent your spouse from unfairly draining joint accounts or hiding assets.
2. Standing Orders
One effective tool for preventing a spouse from transferring or hiding assets is standing orders from the court. These are court-issued directives that immediately go into effect once a petition for divorce is filed without the need to request that the court order them. Standing orders can prevent spouses from withdrawing money except to pay for living expenses and legal fees, changing beneficiaries on insurance policies, and selling property. Some courts have standing orders already in place, in which case, these protections are automatically applicable in your divorce case once you file, but others do not. Check with the county in which you have filed to see whether there are standing orders in your case.
3. Request a Temporary Restraining Order (TRO)
Short of an automatically-effective standing order, one of the quickest and most effective ways to prevent your spouse from moving or spending money during a divorce is by obtaining a TRO. This is a legal order that prevents both spouses from engaging in certain financial activities until a temporary orders hearing takes place.
A TRO typically prohibits moving or transferring assets, spending, and incurring debt except to pay for reasonable and necessary living expenses and attorney’s fees. A TRO provides immediate protection, but it’s important to note that the restrictions are just as the title suggests: temporary. They will expire in 14 days (with one possible extension for another 14 days), but this should be plenty of time to get you to the next safeguard.
4. Request Temporary Orders
If a TRO is insufficient or if you need financial protection for longer, you can request temporary orders from the court. These are designed to maintain the status quo during divorce proceedings. They will often require both parties to maintain existing bank accounts, credit cards, and insurance policies, as well as prohibiting transfers in the same fashion as a TRO would. However, these orders will last throughout the pendency of the case, unlike a TRO. Temporary orders require either an agreement between the parties to put the orders in place or a hearing before the court, often held within a few weeks of filing for divorce.
5. Gather Financial Records and Documentation
Before your spouse has the chance to hide assets, begin gathering all of your financial records, including:
- Bank statements
- Credit card statements
- Tax returns
- Paystubs
- Investment account records
- Retirement plan records
- Mortgage and loan documents
The more financial records you can gather, the better. These documents can help you identify any discrepancies in spending and uncover potential hidden assets.
6. Monitor Shared Assets and Expenses
If your spouse continues to have access to shared accounts, monitor them carefully for any unusual or excessive spending. Look for:
- Large withdrawals or transfers to unfamiliar accounts
- Unexplained purchases, especially if they seem out of character for your spouse
- Increased credit card debt or loans that you were unaware of
If you notice anything suspicious, immediately inform your attorney, who can file motions to prevent any further movement of funds.
7. Consider Hiring a Forensic Accountant
If you suspect your spouse may be hiding assets or diverting money during the divorce, you may want to hire a forensic accountant. These are professionals who specialize in tracing and uncovering hidden or misappropriated assets, including:
- Unreported income
- Money moved between accounts
- Undisclosed business interests
- Excessive spending
A forensic accountant can review your spouse’s financial records in-depth, look for red flags, and help you build a case to ensure that you receive your fair share of the marital estate.
8. Be Prepared for the Necessity of a Hearing
Understand that divorce often involves financial disputes, and things may not always go smoothly. If your spouse is trying to hide assets or is acting unreasonably, the court may need to get involved to issue orders to freeze accounts or impose penalties in response to attempted fraud. Be prepared for the possibility that you will need to go to court to resolve these issues.
Conclusion
If you are concerned about your spouse moving or spending money during your divorce, it is crucial to take action quickly to protect your financial interests. Requesting a TRO or temporary orders are just a few of the steps you can take to prevent your spouse from unfairly depleting joint assets. The more proactive you are in gathering financial information and seeking legal help, the more likely you are to ensure an equitable resolution and stop fraud or asset concealment before it begins.