Divorce is already a complex legal process, but when one spouse attempts to hide assets, the case can become significantly more complicated. Colorado courts treat financial transparency as a fundamental obligation during divorce proceedings. In this article, we’ll explore how the legal system in Colorado detects, addresses, and penalizes the concealment of assets.
The Duty of Full Financial Disclosure
Under Colorado law, both parties in a divorce are legally obligated to provide full and honest disclosure of their financial situation. This duty is codified in Colorado Rule of Civil Procedure 16.2(e)(1), which requires each party to exchange a sworn financial statement and supporting documents, such as tax returns, bank statements, and lists of assets and debts. The rule also mandates that these disclosures be updated promptly if circumstances change (Colo. R. Civ. P. 16.2(e)(1)).
What Constitutes a Hidden Asset?
Hidden assets can take many forms, from secret bank accounts and unreported income to undervalued property or transferring assets to friends or family members. Any deliberate action to obscure or underreport assets violates the obligation of full disclosure.
Examples include:
- Stashing cash or cryptocurrency in undisclosed accounts
- Transferring property titles to third parties temporarily
- Failing to disclose ownership of stocks or business holdings
- Undervaluing collectibles, artwork, or business interests
Legal Tools for Uncovering Hidden Assets
Colorado courts employ various legal mechanisms to uncover hidden assets, including:
- Discovery Process
Attorneys can issue subpoenas for bank records, credit reports, business records, and more. Depositions may also be conducted to question a party under oath. - Forensic Accounting
A forensic accountant can trace financial transactions to detect inconsistencies, unusual transfers, or missing funds. This expert analysis often plays a key role in high-asset divorces. - Court Orders for Disclosure
Courts can compel disclosure or impose sanctions if a party fails to comply. In extreme cases, the court may issue an adverse inference, assuming the non-disclosed information would have been unfavorable to the withholding party.
Penalties for Hiding Assets
Colorado courts take asset concealment seriously. If a judge finds that one party intentionally failed to disclose assets, the consequences can be severe.
- Reallocation of Assets
Under Colo. Rev. Stat. § 14-10-113(1), marital property must be divided equitably, not necessarily equally. When one spouse hides assets, the court can award a larger share of the marital estate to the other party as compensation. - Contempt of Court
Failing to provide required financial information may lead to contempt proceedings. Sanctions may include fines, attorney fees, or even jail time. - Post-Divorce Remedies
If hidden assets come to light after a divorce is finalized, Colorado law permits a motion to reopen the case under C.R.C.P. Rule 60(b) due to fraud or misconduct.
Real-World Example: In re Marriage of Evans
In the important case In re Marriage of Evans, 2021 COA 141, 504 P.3d 988, the Colorado Court of Appeals addressed a situation where the husband failed to disclose his ownership of a construction company during the divorce proceedings. Years later, during child support modification proceedings, the wife discovered the omission. The court found that the nondisclosure materially affected the division of marital assets and awarded the wife over $1 million to compensate her for her share of the undisclosed business. This case emphasizes Colorado courts’ strong stance on the importance of financial transparency in divorce.
Protecting Yourself From Financial Deception
Whether you suspect your spouse of hiding assets or want to ensure full compliance on your part, the following steps can help:
- Hire a skilled divorce attorney with experience in high-asset and complex financial cases.
- Retain a forensic accountant if necessary.
- Document everything: emails, receipts, and financial communications.
- Act quickly if you believe deception is occurring—delays can harm your case.
Safeguarding Your Financial Future During Divorce
Colorado law is clear: transparency is non-negotiable in divorce. The courts have robust tools to investigate and punish financial deception. If you are going through a divorce and believe your spouse may be hiding assets, contact an experienced attorney like Brian Boal at Boal Law to protect your rights and secure your future.