In Texas, most types of assets that either spouse acquires during marriage automatically become “community property” that both spouses own equally, including real estate, retirement accounts and investments. During divorce, the court tries to divide community assets between spouses in a way that is fair to each party and promotes the best interest of shared children.
Unfortunately, from hiding cash or creating secret accounts to holding assets with a family member or business partner, there are many ways that spouses facing divorce may try to avoid a fair court-ordered division of property.
Texas’ initial disclosure requirement
To divide assets fairly, it is essential that the court receives a full picture of the marital estate. In Texas, the law requires that each spouse voluntarily exchange an initial disclosure of financial information as part of the discovery process. In addition to copies of the most recent statements for any financial accounts, both spouses must provide information about:
- Real estate holdings
- Retirement, pension or other profit-sharing benefit plans
- Life, liability, casualty and health insurance policies
If the court must make a child or spousal support decision, both parties must also provide copies of recent payroll checks, income tax returns and health insurance documents.
Penalties for concealing assets
This initial disclosure is only the beginning of the discovery process. From further requests for documentation or sworn statements to analysis by a forensic accountant, there are many ways for an opposing attorney to uncover concealed assets.
The penalties can be severe if the court finds that a spouse failed to disclose or falsified required information. In addition to awarding a larger portion of community property to the other party, a judge may favor the other spouse in child support and/or custody decisions and require the dishonest spouse to pay the other’s legal fees.