In a divorce, both spouses are required to fully disclose their assets. This disclosure is considered a “fiduciary duty” that is very serious, very important, and essential disclosure for both parties to a dissolution proceeding. Disclosing assets is necessary in order to ensure that they are fairly divided. In a perfect world, both spouses would be honest about which assets they have and how much each asset was worth. Mutual honesty would allow dissolution proceedings to move smoothly and get both spouses situated in their new, separate lives. Unfortunately, though, honesty is often one of the first casualties in a divorce. One spouse may try to cheat financially, either hiding or undervaluing their assets. Often, the other spouse may never realize that financial cheating has taken place. If the spouse does detect cheating, however, they can take legal action against their ex-partner. Legal action, in this case, means filing a claim for breach of fiduciary duty.
Under a breach of fiduciary duty claim, a court will investigate the allegations of fraud and other breaches of fiduciary duties. The court may work to gain more information about the asset by having an expert such as a forensic accountant to re-assess its value or re-classify the asset’s category. If the facts are clear that fraud has occurred, the court may take a number of actions to fix the situation. First, the court may require the name of the other spouse to be added to the title of the asset, thereby giving them access to it. A court may also order the dishonest spouse to pay their partner fifty percent of the value of the omitted asset along with attorney fees. At worst, a court will award the spouse who has been deceived with one hundred percent of the hidden asset’s value and level fines against the dishonest spouse. This punishment shows that honesty is the best policy, especially in cases of divorce. It is better to be honest and declare an asset than to risk losing the asset and having to pay fines because of dishonesty.