What’s the best way to hide money from your spouse before divorce and where is the best place to hide it?

What’s the best way to hide money from your spouse before divorce and where is the best place to hide it?

You should not hide marital money from your spouse. That money is as much his/hers as it is yours. Hiding marital money from your spouse would be no fairer to your spouse than would be embezzling money from your business partner—you have no right to hide that money and to try to keep it for yourself.

There is, however, a difference between hiding money from your spouse and “securing” money so that your spouse does not waste it (which is known as “dissipation” and/or “diminution” of marital assets and the marital estate). If your spouse is a spendthrift, or you fear that your spouse is going to try to hide money from you, then one way to protect marital funds from being wasted is to convert money into assets that are not liquid, such as real estate (raw land, rental property). Another option would be giving money to your children or setting up trusts for children’s future or education (as long as you’re truly giving the money to your children and not using those transfers to the children as a front for keeping the money for yourself*). In Utah, assets belonging to the children are not marital assets, and may not be divided between husband and wife in a divorce. Jefferies v. Jefferies, 895 P.2d 835 (Utah Ct.App.1995)

*See Jefferies v. Jefferies, 895 P.2d 835, ¶ 8 (Utah Ct.App.1995):

“A transfer made pursuant to the Uniform Transfers to Minors Act “is irrevocable, and the custodial property is indefeasibly vested in the minor.” Utah Code Ann. § 75–5a–112(2) (1993). It is beyond the jurisdiction of the court when dividing marital assets between the parents in a divorce proceeding to reach assets of the children. We therefore must remand this case to the trial court to divide the assets equitably without the inclusion of the children’s accounts. Of course, in making an equitable division between the spouses, the trial court, given the findings of fact in this case, may take into consideration the transfers made by Mr. Jefferies to the children at the expense of Ms. Jefferies. Although the trial court cannot reach the children’s separate assets, it can hold Mr. Jefferies accountable to Ms. Jefferies for a dissipation of marital assets. See Andersen v. Andersen, 757 P.2d 476, 479 (Utah App.1988).”

What constitutes marital property (and property includes money)?

In Utah, where I practice divorce law:

“Marital property is ordinarily all property acquired during the marriage … whenever obtained and from whatever source derived.” Id. (omission in original) (citation and internal quotation marks omitted); see also Gardner v. Gardner, 748 P.2d 1076, 1078–79 (Utah 1988) (explaining that “marital property encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived” (citation and internal *938 quotation marks omitted)). By contrast, “separate property, which may include premarital assets, inheritances, or similar assets, will be awarded to the acquiring spouse.”

So that means:

  1. your earned income is marital property, meaning that your spouse has as much right to your income as you do (and vice versa)
  2. passive income from a business or from investments that you established during the marriage are marital property, regardless of whether you established the business and/or the investments jointly with your spouse during the marriage; either way, that income is marital property.

What is not marital money?

In Utah, where I practice divorce law:

  1. money or other property you inherit is not marital property, so long as you don’t commingled that money or property with other property or gift that money or property to the marriage or marital estate. What am I saying? The inherited money/property would become marital property if ownership of it can no longer be distinguished from the marital property. Let me give you a few examples:
    1. If you inherited $30,000 and then deposited that money into a joint account with your spouse, a case could be made that the money is now commingled and thus marital property.
    2. If you inherited $30,000 and then used that money to remodel the house that you and your spouse own together, a case could be made that the money is now commingled with marital property and has thus become marital property.
  2. compensation for a personal injury can be either separate property or marital property, depending on the nature of the damages, but specifically, amounts received as compensation for pain, suffering, disfigurement, disability, or other personal debilitation are generally found to be the personal property of the injured spouse in divorce actions, while money realized as compensation for lost wages and medical expenses, which diminish the marital estate, are considered to be marital property. (Naranjo v. Naranjo, 751 P.2d 1144, 1146 (Utah Ct. App. 1988))
  3. Income you receive during the marriage, but from a source other than your employment (such as A) from a trust that existed before your marriage or that was created by a third party for your sole benefit, and that you do not spend on marital expenses or that is deposited in an account in your name only; or B) from investments you made before your marriage that stay in accounts you opened before marriage) will likely be considered your separate property.

Utah Family Law, LC | | 801-466-9277

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