Latest Family Law Insights

My Spouse Is Hiding Assets – What Can I Do?

Published on December 1st, 2020 and updated on August 19th, 2021

In many cases, when a marriage starts to deteriorate, spouses start doubting their partner’s intentions and may even be afraid of the spouse hiding assets. This suspicion can arise for many reasons, such as exclusion or the lack of involvement in financial management during the relationship by one spouse. When this fear of hiding assets in divorce is justified, it could mean legal problems later on if there was no prior agreement detailing these specifics before things started going downhill with your husband/wife.

When couples experience difficulties in their marriages, they sometimes suspect the other person has been hiding money from them, which usually arises when either party has been excluded or chooses not to proactively manage finances while married. But sometimes, those fears become warranted, meaning trouble in the future if an agreement wasn’t made beforehand.

You may need to ask questions specific to where missing money is going or if your spouse is actively hiding assets that will indicate something else is going on? – such as an attempt at minimising exposure during settlement negotiations down the line by holding back on financial information.

Family law matters often involve complex corporate structures, and it is not uncommon for one party to assert that the other is hiding assets ‘behind a corporate veil’.

Case Law For Hiding Assets in Divorce

In the matter of Atkins & Hunt and Ors [2020] FamCAFC 252 (9 October 2020), the Full Court of the Family Court of Australia considered the issue of when it is established that a company is a ‘mere puppet’ or ‘alter ego’ of a party, and when the court ought to treat a party and company as one and the same.

This matter was an appeal of final orders made on 18 December 2019 that divided the parties’ assets 80% / 20% in the husband’s favour. In effect, this required the husband to pay the wife $964,693 and for the parties to otherwise retain the assets in their respective names, possession, or control.

The matter was first heard on 4 December 2014. However, the wife successfully appealed those orders, and the matter was remitted for re-trial.

The husband operated a business X Pty Ltd. Half of the class A shares in X Pty Ltd, which entitled the holder to have exclusive control over the company, were owned by the husband. The remainder of the class A shares were held by the company Y Pty Ltd. The husband owned 99% of Y Pty Ltd.

Whilst the first appeal was pending, the husband disposed of the majority class A shares held by him and by Y Pty Ltd into X Pty Ltd, giving them to his children for modest financial consideration.

The wife alleged that the corporate structure of X Pty Ltd was the “alter-ego” of the husband and that the disposing of the shares was done to defeat an anticipated property settlement. It was agreed at re-trial that the value of the husband’s share in the entity had the transfers not taken place would have been $5,993,000.

The wife also argued that “the husband’s control over [the entity] means that its full value should still be ascribed to him on the balance sheet” [paragraph 17]. The wife was unsuccessful in arguing this. The court also held that, recognising that X Pty Ltd as a separate legal entity mean that it could not be a “mere puppet” or “alter ego” of the husband.

Whilst it was ultimately held that the husband had transferred the shares in an attempt at hiding assets during a divorce and defeat an anticipated claim by the wife, the wife was not successful in arguing that the entity was a “mere puppet” or “alter ego” of the husband. Accordingly, she appealed.

Appeal 2.0

The first ground of the wife’s appeal was that the trial judge erred in not finding that companies X Pty Ltd and Y Pty Ltd were the ‘alter ego’ of the husband. The wife also asserted that the primary Judge erred in that he did not make an adverse inference from the husband’s (and other respondent’s) failure to lead certain evidence.

At paragraph 33 the Full Court stated “The wife… focussed on the capacity of the husband to control [X] Pty Ltd as demonstrating that the company and the controller should be treated as one and the same.” This argument was, however, rejected, with the court concluding that “something more than mere control is required.”

In considering the wife’s contention, the Full Court referred to the original trial judgment of Bryan CJ and Murphy J, stating that establishing an ‘alter ego’

“does not devolve from the indicia of control by a shareholder; corporations, where considerable control is vested in a particular shareholder, do not per se forego their separate personality. Rather, the concept refers to the company having no existence and direction separate from that of the relevant shareholder” [paragraph 32]

At appeal, the onus was on the wife to prove that the company was a mere puppet (Ascot Investments Pty Ltd v Harper (1981) FLC ¶91-000; (1981) 148 CLR 337). It was therefore incumbent upon the wife to call evidence in support of her claim that the directors did everything the husband told them to do. The wife contended that an adverse inference could be drawn of the husband’s failure to produce evidence to the contrary. This was rejected.

Why Does This Case of Hiding Assets in Divorce Matter?

Separation can be difficult, and matters involving corporate structures require a comprehensive understanding of the assets. It’s important to get advice early on in order to make sure you have all your bases covered and your spouse is not hiding assets prior to a financial settlement.

The matter of Atkins & Hunt and Ords provides an important example of the difficulties and arguments that may arise in matters involving corporate entities (and in particular family members).

If you are considering the process of how to divide assets or have concerns your spouse is hiding assets prior to separation and divorce, it is important that you get advice early. The process can be complex and time-consuming without the right guidance or legal representation on your side.

Don’t let anything slip by if you are concerned your spouse or partner is hiding assets. Contact our friendly team today if you would like to discuss your options on, 03 9070 9839 or info@sagefamilylawyers.com.au

Frequently Asked Questions

How do I uncover hidden assets during divorce?

If you are going through a separation, divorce or property settlement, hiring an experienced and knowledgeable family law lawyer is advised to help make sure there are no hidden assets. Hiring someone who has previously conducted hidden asset searches can also give peace of mind when negotiating agreements.

Is it illegal to hide assets before or during separation or divorce.

Yes, it is. It is a common misconception that the other party does not know about your assets and earnings once you are separated. The duty of disclosure still stands even when two people are no longer living together under one roof. Suppose either person acquires any new property or income since they’ve been away from each other for more than six months. In that case, it’s their responsibility to tell the ex-partner as soon as possible so that an accurate asset list can be given at divorce proceedings if necessary.

What is the penalty for hiding assets in a divorce?

When a spouse commits an egregious violation of their legal obligation to disclose, they may be imprisoned or fined. Judges can also award the entire amount of undisclosed assets as a penalty for lack of disclosure.

Can a spouse hide assets before a divorce?

It is a fundamental part of any family law case that parties involved must be open and honest with the Court. This duty goes on for as long as the process does, from the pre-action phase until after it’s over.


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Harry graduated from La Trobe University in 2016 and has worked exclusively in family law.