Divorce is never easy. It is an emotionally draining and legally complex process that often leaves spouses feeling uncertain about their future. When the relationship has been high-conflict and trust has eroded, divorce becomes even more complicated—especially when finances are involved.
One of the most frustrating situations occurs when one spouse suspects the other of hiding assets. This could include unreported income, secret accounts, or financial manipulation designed to prevent fair division of property. Unfortunately, this happens more often than many realize.
If you’re asking yourself, “What to do if your spouse is hiding assets during divorce?” you’re already taking the right step by learning the signs and preparing to act. Below, we’ll walk through five common red flags, explain what you can do in each situation, and provide practical legal strategies to protect yourself.
1. Sudden Changes in Income or Employment
One of the most common tactics spouses use to manipulate financial outcomes is claiming a sudden reduction in income. For example, a spouse who has consistently worked overtime may suddenly stop working extra hours right before divorce proceedings begin. Others may accept a suspicious pay cut, transfer to a lower-paying position, or delay bonuses and commissions.
In some cases, self-employed spouses or business owners may underreport income by altering invoices, paying employees “under the table,” or inflating business expenses. The goal is to make their financial situation appear worse on paper, reducing what they might owe in child support or spousal support.
Why this matters:
Income is a major factor in both child support and alimony calculations. If your spouse manipulates their income, it can directly impact your ability to provide for yourself and your children.
What you can do:
- Request financial documentation. Review recent pay stubs, tax returns, and W-2s. If your spouse is self-employed, ask for profit-and-loss statements.
- Compare past and present income. Look for sudden drops without reasonable explanation.
- Seek official records. You can obtain tax transcripts directly from the IRS at IRS – Get Transcript of Tax Records.
- Work with your attorney. If necessary, your lawyer can subpoena employment or payroll records to confirm whether income changes are legitimate.
2. Unexplained Withdrawals or Transfers
Large withdrawals, suspicious transfers, or unusual “loans” to family members are red flags that money may be disappearing. Spouses sometimes transfer funds to relatives or friends under the guise of repayment, with the expectation that the money will be returned after the divorce is finalized. Others may open new accounts without disclosure.
Cash transactions are particularly concerning because they are difficult to trace. For example, withdrawing $10,000 in cash just before divorce proceedings can leave you wondering where that money went and whether it is being hidden.
Why this matters:
If marital funds are being siphoned away, the division of property becomes unfair. Every dollar hidden is a dollar that cannot be considered during settlement negotiations or court orders.
What you can do:
- Review account activity regularly. Look for large or frequent withdrawals, especially those made without explanation.
- Document suspicious activity. Keep copies of bank statements and note the timing of withdrawals.
- Inform your attorney immediately. Quick legal action may prevent further asset concealment.
- Consider a financial restraining order. In some cases, courts will freeze marital accounts to prevent additional transfers until the divorce is finalized.
3. Hidden or New Debts
Another way a spouse can manipulate the financial picture is by creating or inflating debt. This can include opening new credit cards, taking out personal loans, or “borrowing” against marital assets without your knowledge.
Sometimes spouses fabricate debts, claiming to owe large sums of money to friends or relatives. In reality, these are sham transactions designed to reduce the appearance of available marital property, and can even reduce your credit score due to non-payment and other factors.
Why this matters:
Under Texas community property law, debts incurred during the marriage may be divided between spouses. If your spouse creates fake or unnecessary debt, you may be unfairly saddled with obligations you did not benefit from.
What you can do:
- Pull a credit report. Visit AnnualCreditReport.com, the only government-authorized source for free annual reports, to review accounts in both names.
- Verify debts. Check whether debts were legitimately incurred and whether they benefited the household.
- Challenge fraudulent claims. Your attorney can present evidence to the court disputing debts that appear fabricated or unreasonable.
4. Lifestyle That Doesn’t Match Reported Income
Sometimes, the truth is hiding in plain sight. If your spouse claims financial hardship but continues to take vacations, purchase luxury items, or maintain an expensive lifestyle, it’s a strong sign they’re not being fully transparent.
For example, if your spouse reports earning only $50,000 per year but continues driving a new luxury car or paying for private school tuition, the numbers don’t add up. Lifestyle evidence can be powerful in court because it demonstrates financial resources inconsistent with reported income.
Why this matters:
Courts rely heavily on financial disclosures to determine support and property division. If your spouse is living beyond their reported means, they may be underreporting income or hiding funds.
What you can do:
- Track expenses. Keep receipts, photographs, and records of major purchases.
- Use social media. Posts about trips, new vehicles, or lavish spending can provide evidence of hidden income.
- Share findings with your attorney. Lifestyle evidence can support claims that income is being underreported.
5. Refusal to Provide Financial Documents
During divorce, both parties are required to make full financial disclosure. This includes bank accounts, tax returns, investment statements, and retirement accounts. When one spouse stalls, withholds, or outright refuses to provide documentation, it is often a sign they have something to hide.
Some spouses may claim records are lost or unavailable. Others may provide incomplete information. These tactics are deliberate attempts to conceal assets and delay the process.
Why this matters:
Full financial disclosure is necessary for fair property division and support calculations. Without complete information, you may walk away with less than you deserve.
What you can do:
- Request disclosure formally. Work with your attorney to demand complete financial records.
- Use the courts if necessary. The Texas Judicial Branch – Divorce Information outlines disclosure requirements. Courts can compel spouses to produce documents.
- Hire forensic experts. A forensic accountant can uncover hidden accounts, trace transfers, and verify financial accuracy.
What to Do If Your Spouse Is Hiding Assets During Divorce
If you believe your spouse is hiding money, you may feel overwhelmed and frustrated. However, you are not powerless. Here are the critical steps to take:
- Hire an experienced attorney. Not every lawyer is equipped to handle high-conflict cases with hidden assets. Choose one with a track record in contested divorce.
- Gather documentation. Collect as many financial records as possible, including bank statements, pay stubs, tax returns, and investment documents.
- Act quickly. The sooner you take action, the easier it is to trace hidden money before it disappears.
- Leverage experts. Forensic accountants and financial investigators can uncover hidden accounts, unreported income, and suspicious transfers.
- File motions if necessary. Courts can freeze accounts, compel disclosure, and penalize dishonest spouses.
- Stay focused. Divorce is emotional, but decisions based on anger can weaken your case. Trust your legal team to guide you.
Why Hidden Assets Matter in a Divorce Settlement
Hidden assets don’t just create unfairness—they directly affect your financial stability for years to come.
Under Texas law, all marital property is considered community property unless proven otherwise. This includes income, real estate, retirement accounts, and even certain business assets. If your spouse successfully hides money, the court cannot divide it.
Fortunately, Texas courts take financial dishonesty seriously. Under Texas Family Code – Chapter 7, courts can:
- Award a disproportionate share of property to the innocent spouse.
- Penalize or sanction the spouse who attempted to hide assets.
- Consider hidden money when awarding attorney’s fees.
This is why it’s so important to understand what to do if your spouse is hiding assets during divorce. Protecting your financial future starts with uncovering the truth.
Frequently Asked Questions (FAQs)
1. What should I do first if I think my spouse is hiding assets during divorce?
The first step is to consult with an experienced divorce attorney. Bring any financial records, bank statements, or suspicious activity you’ve noticed. Acting quickly helps preserve evidence.
2. Can the court punish my spouse for hiding money?
Yes. Texas courts can impose sanctions, award you a larger share of property, and even require your spouse to pay attorney’s fees if they are caught concealing assets.
3. How do forensic accountants find hidden money?
Forensic accountants analyze bank statements, tax returns, and business records to identify discrepancies. They can trace hidden transfers, detect underreported income, and uncover hidden accounts.
4. Can hidden assets affect child support and alimony?
Absolutely. Support calculations are based on reported income. If your spouse underreports earnings, child support or spousal support may be unfairly low until hidden assets are revealed.
5. Is it illegal for my spouse to hide assets during divorce?
Yes. Concealing assets violates disclosure laws and can be considered fraud. Courts take this behavior very seriously.
6. What if my spouse hides assets overseas?
Hidden assets in foreign accounts are harder to trace but not impossible. Attorneys and forensic specialists can work with international authorities and financial institutions to uncover offshore funds.
7. How can I protect myself financially during divorce?
Keep copies of all financial documents, monitor account activity, and consult with your attorney before making major financial decisions. You may also request court orders to freeze accounts until the divorce is finalized.
Protect Yourself with the Right Legal Team
At the Law Office of Chris Schmiedeke, we know how overwhelming it is to divorce a high-conflict spouse who plays games with money. Our team has decades of experience uncovering hidden assets, holding dishonest spouses accountable, and protecting our clients’ rights in contested divorces.
If you suspect your spouse is hiding assets, don’t wait until it’s too late. The sooner you act, the stronger your case will be.
📞 Contact us today to schedule a confidential consultation.