What Happens If One Spouse Doesn’t Disclose All Assets in Divorce?

The divorce process can be very emotionally draining. In addition to the emotional toll of divorce, one of the most significant parts of any breakup is the division of marital property. Both spouses have a legal duty to be transparent about their financial information, including their income, assets, and debts. If one spouse is hiding assets in a divorce settlement, it could be very unfair to the other spouse's financial situation.

In New York, the failure to disclose assets in a divorce is not only unethical, it's also illegal. When one spouse hides their financial holdings, it undermines the fair financial settlement that the court has tried to create, and it can lead to very serious consequences.

What happens if one spouse doesn't disclose all assets? What option or legal tools does the other spouse have? What are the severe legal consequences that the spouse caught hiding assets may face?

Let's find out.

Full Financial Disclosure Is a Legal Requirement During Divorce Proceedings

During any divorce, both spouses are required to give full and complete financial disclosures. This ensures that marital property, which is everything acquired during the marriage, is divided equitably. This equitable division of process is how courts make sure that both people get their fair share...though it's not necessarily a 50/50 split.

Under New York Domestic Relations Law (DRL) §236, both spouses must complete and exchange a Statement of Net Worth, which details assets, liabilities, income, and expenses. This document includes everything from bank accounts and retirement funds to business interests and real estate holdings.

Financial disclosure forms should include everything...and the court relies heavily on these disclosures when determining equitable distribution, spousal support, and even child support.

If a spouse gives false information or if they omit assets, like trying to put money in offshore accounts, it can be perjury.

Common Ways Spouses Try to Conceal Assets

Hidden assets can take many forms. Some people try to attempt to conceal their property on purpose. Other may try to minimize their income or manipulate their financial documents. Some of the most common tactics include:

• Transferring assets to friends or relatives – Moving money or financial interests to another person’s account or temporarily “gifting” property.

• Underreporting income – Particularly common among self-employed individuals or business owners.

• Delaying bonuses or commissions – Postponing payments until after the divorce is finalized.

• Creating fake debts – Claiming false loans or exaggerated business expenses to reduce apparent net worth.

• Opening secret accounts – Setting up undisclosed bank or cryptocurrency accounts.

• Hiding physical valuables – Withholding jewelry, collectibles, or cash from inventory lists.

While these actions of financial deception may seem clever in the short term, typically its easy to expose financial discrepancies by tracing financial transactions and looking at financial statements. The consequences and legal penalties can be severe.

How Hidden Assets and Financial Deception Are Discovered

In a nutshell, these divorce attorneys in Albany NY and forensic accountants use various methods to uncover hidden assets. In a divorce cases, the discovery process allows both parties to provide financial documents and the other spouse to see these financial details. This legal process ensures transparency and fairness.

1. Discovery Requests

During the discovery phase, each spouse’s attorney can request documentation such as:

• Bank statements and credit card financial records

• Tax returns and W-2s

• Business records and payroll information

• Property titles and mortgage statements

• Investment or retirement account statements

Both spouses have a legal obligation to share this, and if a spouse refuses to comply with discovery requests, it can lead to sanctions or court orders.

2. Depositions and Interrogatories

Attorneys may also conduct sworn questioning under oath, known as depositions, or submit interrogatories (written questions). False answers during this stage can expose a spouse to legal action like perjury charges.

3. Forensic Accounting

When large sums or complex assets are at stake, divorce lawyers often hire forensic accountants. These professionals trace money through bank accounts, investments, and tax filings to detect irregularities. They may also review business records to ensure income is not being underreported.

4. Subpoenas

Attorneys can issue subpoenas to banks, employers, or other institutions to access third-party records to confirm things like the spouse's reported income. These independent sources can confirm or contradict a spouse’s claimed financial picture.

5. Digital Evidence

Today, hidden assets often leave a digital trail. Emails, texts, online banking activity, or cryptocurrency transactions can all be used as evidence of concealed wealth.

Once discovered, the courts don't take financial dishonesty lightly. Fair property division is a big part of any divorce process, and if they can't do this fairly, they will take action.

Legal Consequences for Failing to Submit Complete Financial Disclosures

In New York, intentionally hiding marital assets in a divorce can lead to both civil and criminal penalties. It is a community property state, and the court’s goal is to maintain fairness and punish misconduct that undermines the integrity of the judicial process.

1. Sanctions and Fines

A judge may impose monetary sanctions or fines against the dishonest spouse who was hiding undisclosed accounts or other money. These penalties compensate the honest spouse for additional legal costs or damages caused by the deceit of their ex.

2. Loss of Property Rights

If hidden assets are uncovered, the court may award the entire value of those assets to the innocent spouse as punishment. For example, if a husband conceals a bank account containing $100,000, the court can order that all of it go to the wife in a settlement agreement.

This principle was reinforced in Mahoney-Buntzman v. Buntzman (2009), where the New York Court of Appeals emphasized that full financial transparency is essential for equitable distribution and asset division.

3. Modification of Court Orders

If hidden assets are discovered following the divorce, the innocent spouse can reopen the case. A court can overturn the original order and modify it based on new evidence.

4. Perjury or Contempt of Court

Lying under oath about finances constitutes perjury, which is a criminal offense. Additionally, not complying with discovery orders or court directives can result in contempt of court. This leads to fines or even jail time.

5. Attorney’s Fees

The spouse who concealed assets may be ordered to pay the other party’s attorney’s fees and court costs related to uncovering the deceit.

The Role of a Divorce Lawyer

A divorce lawyer will play a very important role in identifying and addressing any hidden assets. An attorney will know the signs of concealments and use tools to ensure their client gets a fair settlement. They can also advise on What happens if we have a prenuptial agreement?

A divorce lawyer can:

• Demand full financial disclosure under oath.

• Subpoena financial institutions, business partners, or employers.

• Work with forensic accountants to discover undisclosed income.

• File motions with the courts for contempt or sanctions it's proven the other spouse is hiding assets.

• Reopen a finalized divorce judgment if issues are discovered after the case is closed.

Having a lawyer ensures the process remains transparent and protects the other spouse's rights throughout the divorce process. They're able to help with questions such as What happens if my spouse is self-employed?

What to Do If Hidden Assets Are Suspected

If a spouse suspects that the other is hiding assets, it's important to take action ASAP. Here's what you should do:

1. Document Everything

Keep records of everything. This includes financial transactions, receipts, credit card statements, proof of cash withdrawals , any type of transferring money actions, unusual transactions, etc. Even if you don't think it matters, all of this could be crucial evidence.

2. Speak with an Experienced Attorney

An Albany divorce attorney can look at the situation and decide if they should start a formal discovery process or work with a forensic accountant.

3. Avoid Taking Matters Into Your Own Hands

Never attempt to hack into accounts, steal documents, or invade privacy. Only evidence obtained legally is admissible in court.

4. File for Discovery or Subpoenas

Through discovery, your lawyer can force your spouse to provide documents or authorize subpoenas for financial institutions.

5. Pursue Court Remedies

If concealment is proven, your attorney can request compensation, sanctions, or a modification of the divorce decree to ensure fairness.

Hidden Assets After Divorce: Can the Case Be Reopened?

Yes. If hidden assets are found, a court in New York can reopen or change a divorce judgement if one person presents new evidence. This might be evidence of fraud or misconduct that was not known at the time of the original divorce.

Even if it's years after the divorce, the innocent party can file a motion to vacate or change the original division order. The court may award the property, or its value, to the wronged spouse in addition to additional damages and attorney fees. There could be other consequences, too.

Preventing Asset Concealment

Though nothing is foolproof, a spouse can take some steps to make it harder for the other person to hide assets. This includes:

• Conduct financial audits early in the process.

• Compare tax returns and reported income against the other spouses expenses.

• Use discovery tools correctly and obtain the most detailed records.

• Monitor credit reports for unfamiliar accounts or loans.

• Seek court orders requiring full financial transparency.

The earlier hidden assets are discovered, the stronger the case is.

Work with a Divorce Attorney From Divorce & Family Legal, LLC

When one spouse fails to disclose all assets during a divorce, the impact goes far beyond financial loss — it erodes trust and undermines the fairness of the judicial process. In Albany, New York, the law takes asset concealment seriously. Spouses who attempt to hide property face sanctions, loss of assets, and even criminal penalties.

The good news is that the legal system provides remedies. With the help of a skilled Albany divorce lawyer, hidden assets can be uncovered, and justice can be restored. Transparency isn’t just encouraged in divorce proceedings — it’s required by law.

Anyone suspecting asset concealment should act quickly, gather evidence, and consult a trusted attorney who can protect their rights and ensure a fair outcome. In the end, honesty remains the strongest foundation for a fresh start.