Garland, TX asked in Divorce for Texas

Q: When a spouse has ownership in a highly profitable business, how can/do they hide/misrepresent assets?

Is hiring a Private Investigators, Financial Forensics Svc, etc… the best way to go when you know your spouse is extremely SHADY (narcissist traits). Focus on finances discovery…

Related Topics:
2 Lawyer Answers
Penny Wymyczak-White
PREMIUM
Penny Wymyczak-White
Answered
  • Houston, TX
  • Licensed in Texas

A: Take Cash or open bank accounts without your knowledge,

John Michael Frick
John Michael Frick
Answered
  • Frisco, TX
  • Licensed in Texas

A: In my experience, the most common ways are for the spouse to use the business entity to purchase and own assets which are unrelated to any legitimate business purpose of the entity and for the spouse to cause the business entity to retain earnings that the spouse is entitled to for providing personal services to the business entity.

A business entity, such as a closely-held corporation, partnership, or limited liability company is a separate legal entity from the spouse. Operated properly, the assets and liabilities of that business entity belong to that legal entity and not to the individual spouse or marital estate of the parties. Only the spouse's ownership interest in the entity is part of the marital estate if that interest was acquired during the marriage.

When a spouse already owns an interest in a business entity at the time of marriage, that interest is and often remains the separate property of that spouse. Any assets acquired by the business entity (e.g. cars, real estate, equipment, etc.) during the marriage is property of the entity which, in turn, is the separate property of the spouse. Some spouses use the business entity to defraud the marital estate by acquiring assets in the entity's name but which they use for personal purposes rather than for the business purpose of the entity. It is often difficult to prove facts to convince the court to disregard the legal entity (sometimes called "piercing the corporate veil") so that it can divide assets owned by the entity as part of the division of the parties' marital estate.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.