The Ontario Family Law Act governs the division of property following a breakdown of relationship. This includes real estate, bank accounts, pensions, benefits and social assistance alongside any additional assets the couple owns.
Why do spouses attempt to hide or misrepresent assets?
Often parties attempt to take matters into their own hands, hiding or misrepresenting assets before they inform their spouse of their intention to separate. They may feel this is justified as they believe that the courts will order them to split or pay more than they would, or they may believe that the laws of property division or support will result in their assets being divided in a way they do not agree with. In certain cases, they may wish to hide specific behaviour or purchases from their spouse or they may wish to reduce or attempt to avoid paying child support or spousal support.
What are common ways that spouses hide assets?
Spouses who are anticipating separating may open a separate bank account to divert money from their spouse. On other occasions, they will hide assets or misrepresent assets in more secretive ways such as:
- providing loans to friends or family;
- making significant purchases e.g. real estate or vehicles;
- hiding income i.e. offshore accounts;
- hiding business assets;
- generating fake business expenses; or
- transferring ownership of property to another individual i.e. family members or friends;
Consequences
Of course, it is illegal to hide or misrepresent assets during a separation or divorce. If opposing counsel or the court uncovers any attempt to hide or misrepresent assets, the judge has the power to levy fines on the party or award the opposing party the total of the assets hidden or misrepresented. In severe circumstances, which usually include occasions where the party hiding assets has failed to make child support payments, the judge may sentence the party to a period of imprisonment (side note: if a party is hiding assets, they could be found in contempt of court- which could result in imprisonment). In addition, if hidden assets are found, the party may be ordered to pay the costs of any resources required to locate them.
Should you suspect that your spouse is hiding assets, a forensic accountant is usually retained to prepare a forensic assessment and report detailing the spouse’s assets. Forensic accountants would conduct asset searches which can locate vehicles, boats and yachts, real estate, investments, and business interests. Forensic accountants may instruct a private investigator to undertaken surveillance of a suspected party.
How can we assist
Our experienced family lawyer can assist parties in divorce proceedings, draft appropriate separation agreements, and assist parties in locating suspected hidden assets. Please contact us to arrange an initial consultation.
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