Earlier this month, a London court ordered Russian Billionaire Farkhad Akhmedov to transfer ownership of a $492 million super yacht to his soon-to-be ex-wife. According to Bloomberg, the billionaire’s transactions represented a “continuing campaign to defeat [his wife] by concealing his assets in a web of offshore companies.”
Rulings like the London court can have a rippling effect.
This result left clients wondering, “What are the consequences of hiding assets in a California divorce?”
There are several ways that someone might hide assets in a divorce proceeding: declaring lower than actual income, inflating debts, or hiding or undervaluing marital property. This post deals primarily with hiding marital property.
In California, each spouse must honestly disclose all assets, income, and debt—on documents signed under penalty of perjury. By signing these documents, the signor declares under oath that the contents of the document are true and correct to the best of his/her knowledge and belief. Lying on such a document is illegal.
In our legal system divorce requires sound representation to avoid costly errors or mistakes. Lavinsky Law has the experience and determination to help you during these stressful times.
Still, this does not always stop a spouse from hiding marital property for him or herself to deprive the other spouse of his or her fair share of the marital property. The consequences of such conduct are steep.
Generally, in California, assets acquired during marriage are community property and are therefore split evenly upon dissolution. However, California law requires the court to award 100% of any asset undisclosed or transferred in breach of fiduciary duty to the other spouse when the deceitful spouse has acted with malice, oppression, or fraud. (For more, see California Family Code Section 1101(h)). The deceitful spouse may also be held in contempt of court or charged with perjury.
A California case, Marriage of Rossi, illustrates this issue. In Rossi, one month before filing for divorce, Wife won over $1.3m in lottery winnings. She did not disclose the winnings to her husband and she used her mother’s address to receive the checks and other lottery-related mailings.
Two years later, when Husband received a letter about the lottery at his home address, he was tipped off, and the parties were back in court. The trial court found that Wife’s intentional failure to disclose the lottery winnings amounted to fraud and awarded 100% of the winnings to Husband. The Court of Appeals affirmed.
The lesson is clear: trying to hide an asset during divorce proceedings is a crime and a deceitful spouse has a lot to lose. The California courts do not look kindly on such behavior. As for how to find hidden assets– now that’s the topic of a different post. Though a super yacht or lottery windfall might not be at stake, justice requires that each spouse get his or her fair share.