How to find hidden assets in a California divorce

Full financial disclosure is not just the best way forward in divorces in California—it is a legal requirement for spouses.

Trying to hide assets can backfire badly and should not be considered. It is illegal and can be highly detrimental to the outcome of your case. If anyone is trying to convince you otherwise, do not entertain these thoughts.

If the boot is on the other foot and you suspect your spouse of hiding assets, it helps to know how you can find hidden assets in a California divorce and some of the warning signs that it might be happening.

Here’s what you need to know.

During California divorces, couples are required to split community (marital) property equally unless spouses agree otherwise—and to do so accurately requires full financial disclosure between the parties.

Hiding income, property, accounts, or any other assets in a divorce can become very costly. If the matter ends up in court, a judge will consider the credibility of each spouse’s claims. Hiding assets rapidly reduces a spouse’s credibility and can lead to:

• A judge awarding a larger share (or all) of the marital assets to the other spouse.
• Financial sanctions or an order to pay your spouse’s legal costs.
• Long-term reputational damage.
• Possible perjury charges.

The additional time, effort, and costs involved in unraveling the truth of hidden assets in a California divorce can add unnecessary delays, disputes, and stress to divorces. Rather than discussion, negotiation, and mediation, cases may involve investigations, subpoenas, forensic accounting, and litigation—during an already difficult period for most spouses.

To find hidden assets in a California divorce, it helps to understand the most common strategies used by deceptive spouses:

Regular small cash withdrawals

If you and your spouse have a joint account, it’s best to separate finances from the moment you part—and use individual bank accounts.

If your partner continues to use a joint account, be wary of repeated small cash withdrawals or requesting “cash back” when making everyday purchases. Sometimes, funds can be spent on items that are difficult to trace or spouses can even hide cash away in secret places.

Valuables removed from safes or deposit boxes

If you keep valuable items like jewelry, gold, collectibles, or cash in a safe at home or in a bank’s safety deposit boxes, check regularly that nothing has been removed. Sometimes, financial documents may also be removed to try to obscure ownership or other account information.

When you and your spouse separate, consider keeping a detailed inventory and photographing the contents of safes—and share the details with your spouse for mutual transparency.

Hiding or deferring income

Another way that assets may be hidden during a divorce is through income “tricks”. For instance, a self-employed spouse can under-report earnings, inflate expenses, delay invoicing until after the divorce is settled, or hide funds by paying “phantom” employees or vendors.

Salaried employees may ask employers to defer bonuses/promotions or hide the proceeds from raises or commissions in new accounts.

If you suspect your spouse of hiding assets during a divorce, several strategies can help to uncover the truth:

• Request full financial disclosure as soon as possible after you separate, so that you can inspect bank records, investment statements, and documents relating to any other assets or debts before any damage is done.
• Start to break down commingled assets: Inspect bank statements and account histories, if necessary, to discover each spouse’s contributions and any assets that should be considered separate from the marital estate.
• Check credit card statements, tax returns, bank statements, and business records for any suspicious financial activity—such as unexplained deposits or unusually large purchases or cash withdrawals.
• Make copies of all relevant financial records and file them.
• Consult with an experienced Los Angeles divorce attorney who can help you trace assets and obtain discovery.
• If serious financial asset concealment is suspected, a forensic accountant may be needed to unravel the truth. You may need to subpoena financial institutions or request documentation like property ownership records.
• If disclosures or discovery are incomplete or withheld, your divorce lawyer can ask the court to issue an order.

Should you retaliate if your partner is hiding assets?

Do not be tempted to retaliate by hiding assets or income of your own. Address the issue with your spouse and, if you cannot rectify the situation between you, seek legal assistance.

Your lawyer will protect your rights and ensure that you don’t make any mistakes that could compromise your legal position.

The main family legislation to refer to if you suspect your spouse of hiding assets is California Family Code Section 1101, which breaks down asset-hiding into two different levels, as follows:

• Standard breach: If your spouse conceals property or income, you may be entitled to 50 percent of the hidden asset’s value (your rightful community share), plus attorney fees and costs related to discovering the hidden property.
• Severe breach: If the concealment involves fraud, malice, or oppression (such as creating false documents), the court can award the entire value of the hidden asset to the other spouse, plus attorney fees and other damages the court deems appropriate.

The judge may also consider the hiding of assets as “bad faith conduct” under Family Code §4320. This could indirectly influence the amount and duration of spousal support.

Criminal penalties for hiding assets in a California divorce

Criminal charges may be filed against a spouse who hides assets:

• Contempt of court charges can be filed for the failure to comply with disclosure orders (fines or even jail time may result).
• Perjury or fraud charges can be filed for intentionally failing to disclose assets on required forms (punishable by up to four years’ imprisonment).

Look out for the following signs if you suspect your spouse of hiding assets:

• Changes in financial behavior, such as sudden secrecy, or refusal to discuss money matters, spending more time online making financial transactions, closing joint accounts without discussion, redirecting mail, or making large unexplained withdrawals or transfers.
• Delays in providing documentation like bank statements, investment reports, or business records, incomplete tax returns, and unexplained gaps in financial records or “lost” documents.
• Major changes or inconsistencies in lifestyle do not match the available financial records.

The family attorneys at The Sands Law Group APLC in Los Angeles can help with guardianship petitions and custody matters. Contact us online or call 213-788-4412 today for a free 15-minute case evaluation.