Reviewed by Paul H. Townsend, ESQ.
- Mandatory Financial Disclosure: NJ Family Part Court Rule 5:5-2 requires both spouses to complete a sworn Case Information Statement (CIS) detailing all income, assets, and debts.
- Formal Legal Discovery Tools: Attorneys use interrogatories, depositions, and third-party financial subpoenas under Rule 5:5-1 to uncover undisclosed accounts and tax records.
- Severe Judicial Penalties: Concealing marital assets or falsifying a CIS can result in court-ordered attorney fee-shifting, adverse evidentiary inferences, and reopening past settlement agreements.
No matter how much you trust your spouse, it is important to know that not everyone will be honest when it comes to divorce proceedings, especially when it comes to the division of assets. It is because of this that it is best not to always take what your spouse says at face value. There is a possibility of hidden assets. Read on to learn more about uncovering hidden assets during a New Jersey divorce.
How are Assets Divided in New Jersey?
The state of New Jersey is an “equitable distribution” state. This means that a judge determines how to divide assets in a way that is fair and just for the couple’s situation. This does not necessarily mean that assets will be split 50/50. In order to divide assets, the judge considers several different factors regarding the relationship in order to make a decision. This may include:
- The age and health of each spouse
- The duration of the marriage
- Economic circumstances
- Each spouse’s contribution to marital property
- Any tax consequence that may apply
How Can Assets be Hidden?
It may come as a surprise, but there are a number of ways to hide assets during a divorce. The most common ways to hide assets, or alter the true value of assets, include:
- Overpaying on taxes so they can get the money back in a refund the following year
- Asking an employer to delay a promotion or raise until after the divorce
- Delaying the receipt of a large commission from work
- Transferring assets to a friend or a separate bank account
Recognizing Financial Fraud and Behavioral Red Flags
It’s important to understand that financial fraud happens when one spouse intentionally conceals, undervalues, or misrepresents the nature of marital assets as a means of preventing equitable distribution. As such, spouses most often try to hide their misuse of funds due to the nature of the expenses, like gambling debts, addiction, or affairs. It is imperative to familiarize yourself with the warning signs of fraud to ensure that you can protect your rights to marital property.
- Sudden Financial Secrecy: Your spouse abruptly changes passwords, blocks online account access, or removes financial records from the home.
- Unusual Cash Activity: Frequent, unexplained cash withdrawals or sudden money transfers between unfamiliar accounts.
- Undisclosed Credit Lines: The discovery of hidden credit cards, loans, or financial accounts opened in a single spouse’s name.
- Pressure to Sign Documents: Being coerced into signing tax returns, loan agreements, or business filings without adequate time or legal review.
Legal Methods to Uncover Hidden Assets Under NJ Court Rules
In order to divide assets, you must first know their true values. It is because of this that it is important to be aware of how you can work to uncover and locate these missing assets if you wish to do so. In many divorce cases, spouses may require the assistance of outside experts. In the event of missing assets, it may be beneficial to retain the services of a forensic accountant. The job of a forensic accountant is to find assets that may be missing in your case. This can be accomplished by monitoring a spouse’s finances to look for unusual transfers or sales. This allows them to track the places their money is going and discover what assets you may not have even known about.
Mandatory Case Information Statement (Rule 5:5-2)
In accordance with New Jersey Court Rule 5:5-2, both spouses are legally required to ensure full financial transparency by completing a comprehensive Case Information Statement. This document requires both parties to provide a complete and accurate account of all income, budgets, tax returns, bank accounts, real estate, business interests, debts, and liabilities. Knowingly including false information constitutes fraud.
Formal Discovery and Third-Party Subpoenas
In the event a spouse fails to include all assets on their CIS, your attorney can initiate formal discovery as per Court Rule 5:5-1. This allows your legal team access to important information directly from financial institutions.
- Written Interrogatories: Formal questions are submitted under oath and require a detailed account of all financial transactions in recent years.
- Financial Subpoenas: Official court orders issued to employers, banks, brokerage firms, and card companies for full, unredacted records.
- Forensic Accounting Tracing: A forensic accountant can examine financial records like tax returns, ledgers, and account transactions to uncover hidden assets or discrepancies in reported lifestyle and income
Consequences of Concealing Assets in New Jersey
Courts in New Jersey take allegations of financial dishonesty very seriously. As such, when a spouse is caught hiding assets or commits fraud during a divorce, the court will impose a number of harsh legal and financial penalties. This can include:
- Fee-Shifting & Attorney Fees: The court often awards the non-offending spouse reimbursement for the legal and forensic accounting fees incurred as a result of the deception.
- Adverse Evidentiary Inferences: The judge may assume that concealed assets do exist, ultimately awarding a larger share of the documented marital assets to the non-offending spouse.
- Reopening Past Judgments: If asset concealment is uncovered after the finalization of the divorce, the court may reopen the settlement agreement and reconsider the distributions
If you believe your spouse may be hiding assets during your divorce, reach out to our firm. We are here to help.
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If you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio, Newmark & Clancy L.L.C today.
