Kentucky follows an equitable distribution model, so courts divide marital property in just proportions instead of automatically splitting it equally. In a divorce, both spouses generally must exchange sworn financial disclosures about their income, assets and debts. When one spouse suspects the other is hiding property, the law provides tools to help uncover it. Knowing what those tools are and how they work can make a significant difference in the outcome of a property division case.
Common ways spouses hide assets
Hidden assets do not always involve offshore accounts or complex schemes. In many cases, a spouse hides money in simpler ways. They may undervalue a business, delay a bonus or commission until after the divorce, overpay the IRS to get a refund later, move cash to a friend or relative or open accounts the other spouse does not know about. In Louisville, where many couples own small businesses or investment properties, undervaluing those assets is a common way to affect the division of property.
Discovery tools available in Kentucky
Kentucky’s Rules of Civil Procedure give both sides access to formal discovery during a divorce. These tools let one spouse request financial information from the other under oath. Common methods include:
- Interrogatories: Written questions about income, accounts, debts and transfers that the other spouse must answer under oath..
- Requests for production: Requests for documents such as bank statements, tax returns, loan applications and business records.
- Depositions: In-person questioning under oath that can reveal gaps or inconsistencies in a spouse’s financial claims.
- Subpoenas: Orders that require third parties, such as banks, employers or brokers, to turn over records.
Kentucky’s civil rules generally allow each party to serve up to 30 interrogatories. Each subpart counts toward that limit unless the court allows more.
When forensic accounting comes into play
Discovery tools help gather the records. A forensic accountant then reviews them closely. These professionals follow where money went, compare reported income with spending, review tax returns and look for transfers that do not match the value of the estate. In cases involving a family business or major investments, that review can reveal a gap between what a spouse reported and what the records show.
Consequences of hiding assets
Hiding assets during a Kentucky divorce can have serious consequences. A court may give a larger share of the marital estate to the other spouse, order the dishonest party to pay attorney fees or hold that spouse in contempt. If someone finds the concealment later, a party may also challenge the judgment.
