Hidden or Undisclosed Assets
Hidden Wealth, Honest Outcome: Exposing Undisclosed Assets in Divorce
You’re going through one of the toughest chapters of your life — a separation or divorce — and the last thing you need is uncertainty. But if you suspect your ex‑partner may be holding back assets — putting them under different names, in offshore accounts, or even as unreported cryptocurrency — you’re not powerless. Understanding your legal rights, the court’s tools, and how to unearth hidden wealth will help you secure what’s rightfully yours.
This comprehensive guide offers clarity on how Australian family law treats undisclosed assets, key legal benchmarks, real‑life examples, and a roadmap to a fair and equitable outcome.
Why Undisclosed Assets Matter
In Australia, both parties are legally required to provide full and frank disclosure of all financial interests — assets, liabilities, income, superannuation, and even interests in trusts and companies. Concealing assets disrupts the fairness of property settlement, unjustifiably shrinks the pool, and can significantly disadvantage you. The court’s commitment to a just and equitable distribution means any attempt at concealment may not only fail—it could backfire.
Key Legal Principles & Case Law Landmarks
Kowaliw v Kowaliw (1981)
If one party deliberately squanders or diminishes the value of assets — whether by reckless disposal or intentional undervaluing — the court can step in. The principle from Kowaliw v Kowaliw affirms that financial losses of this kind may be “notionalised” back into the person’s asset share and dealt with under future‑needs adjustments. That means if your ex tried to devalue or vanish an asset, the court might treat it as though it never left the asset pool — in your favour.
Kennon v Spry (2008)
Trust structures are a widely used tool to hide or shield assets. In this precedent, the High Court held that discretionary trust assets could be considered ‘property’ if one party retained effective control or influence — even if they weren’t legal owners. If you suspect trust‑based concealment, this case provides strong grounds for the court to include those assets.
Briginshaw Standard (1938)
Serious allegations such as asset concealment require strong and cogent evidence, even though they’re judged on the civil “balance of probabilities” standard. The court won’t take your word—it needs clear proof.
Reviews
Case Study: Hidden Offshore Funds Uncovered
Imagine this: You and your spouse have been together for 15 years. You jointly own your home in Sydney, have shared investments, but something doesn’t add up. Financial disclosures don’t align. You hire a forensic accountant, who uncovers an undisclosed offshore account with $300,000 — completely missing from the documents.
You take the matter to the NSW Supreme Court. The court confirms the failure to disclose, includes the offshore funds in the asset pool, orders your spouse to pay your legal costs (over $50,000) and imposes potential contempt or penalty orders. As a result, you end up with a significantly fairer settlement — justice served.
How Hidden Assets Are Detected
Forensic Accounting & Asset Tracing
Forensic accountants are your secret weapon. They dig through bank statements, tax returns, lifestyle inconsistencies, property records, and even social media to build a full picture of financial activity. These experts are adept at spotting:
- Unexpected transfers to friends, family, or offshore entities
- Undervalued assets or unreported income
- Hidden or forgotten cryptocurrency wallets
- Sudden changes in lifestyle inconsistent with declared income
Legal Tools & Court Orders
The law gives you powerful tools:
Subpoenas to obtain banking, employer, or third party records. A subpoena can compel individuals or organisations to hand over documents they might otherwise refuse to disclose. This can be crucial in uncovering hidden accounts, undeclared income, or asset transfers. Courts take compliance seriously, and failure to respond to a subpoena can lead to penalties.
Full and frank disclosure under Rule. 6.06, continuing throughout the case This rule places an ongoing obligation on both parties to disclose all relevant financial information, not just at the start of proceedings. It covers everything from bank statements and tax returns to business records and property valuations. Breaching this obligation can lead to adverse findings and even cost orders against the non-complying party.
Section 106B powers to reverse unauthorised transfers meant to defeat your claim. If assets are moved or disposed of to reduce the property pool, the court can set aside those transactions under Section 106B of the Family Law Act 1975. This can apply to transfers to relatives, friends, or trusts made in bad faith. These powers help ensure that the division of assets remains fair and reflective of the true financial position.
If your ex’s asset concealment is discovered after a settlement, the court may re‑open the matter, potentially setting aside or varying the agreement
The Consequences of Hiding Assets
Trying to skim off the top rarely works. Consequences can include:
Adverse legal inferences, shifting more of the asset pool to you
If a court finds you have concealed property or income, it can assume the worst about your financial position. This often means awarding your former partner a greater share of the remaining assets to offset the perceived dishonesty. Judges view concealment as a serious breach of your duty of full and frank disclosure, and this perception can influence other aspects of the settlement.
Re-opening of the settlement, even years later
Family law allows for final property orders to be revisited if hidden assets come to light after the fact. This can undo the stability you thought you had achieved and reopen costly and stressful litigation. In some cases, the court may even freeze assets or issue urgent injunctions to prevent further dissipation.
Cost orders compelling the dishonest party to pay your legal costs
When a party is caught out hiding assets, the court can order them to cover the innocent party’s legal expenses. These cost orders can be significant and add financial strain on top of the loss of credibility. In some instances, interest may also accrue on the costs owed, compounding the burden over time.
Criminal repercussions, such as contempt of court, fines, or even imprisonment in extreme cases
Misleading the court or breaching disclosure obligations can cross into criminal territory. Serious cases may result in charges of contempt of court, perjury, or fraud, each carrying heavy penalties. Even if imprisonment is avoided, the fines and damage to your professional and personal reputation can be long-lasting.
What You Can Do: Your Action Plan
Be financially vigilant early.
If you're not already, get involved in household finances. Screen for inconsistencies and ask questions — even small gaps can be red flags. Review joint bank statements, loan accounts, and investment reports regularly so you can spot unusual activity before it escalates. Being proactive early can also help your lawyer prepare a stronger case if issues arise later.
Engage the right professionals.
Hire a family lawyer experienced in disclosure disputes and a forensic accountant for early detection of suspicious activity. These experts know where to look and what documentation to request, which can be critical in uncovering hidden funds. Having a specialist team also strengthens your position when negotiating or appearing before the court.
Use discovery tools.
Request full disclosure and, if needed, apply for subpoenas — the law supports transparency. Subpoenas can compel banks, employers, or third parties to provide documents that the other side may not willingly hand over. In complex matters, you may also seek court orders for valuations, audits, or inspection of business records.
Follow suspicious trails.
Pay attention to unexplained transfers, value drops, offshore dealings, or crypto activity. These may indicate attempts to shift assets out of reach. Even something as small as a recurring transfer to a personal account you didn’t know existed can open a broader investigation. Always share your concerns with your lawyer so they can take timely action.
Act promptly.
If hidden assets emerge — even after finalising a settlement — you can ask the court to reopen the matter and secure a just outcome. Acting quickly helps prevent further dissipation and may increase the chance of asset recovery. Delays can make it harder to trace funds, particularly if they have been moved through multiple accounts or converted to other forms.