To hide or not to hide assets? linda.hammerschmid July 21, 2014 8063 Dear Readers: That is the question divorce attorneys are often asked either by the party looking to escape paying or by the other party hoping to collect payments wanting to know where to look for them. Obviously, the spouse with the most assets seeks to minimize the shell-out that the partition of the Family Patrimony and/or the regime of Partnership of Acquests may occasion, not to mention support, while the spouse with the least assets seeks to equalize the disadvantages brought on by a divorce and the marriage. Firstly and foremost, it is counter-productive for anyone to try to hide their financial assets. Why? Because invariably, the other side will find out and then your credibility will be null, so that anything truthful you do say will not be believed by the Courts. Further, if you are caught partaking in such “strategies”, the Civil Code provides for sanctions, such as disqualification from any partition of the asset(s) hidden, and a provision for legal costs due to the extra work involved by your spouse’s attorney to find the assets and prove you are a liar. Of course, many are still willing to take that risk and firmly believe honesty is not the best policy. Moreover, one of the most difficult parts of my practice is listening to clients, in the throws of separation and divorce, tell me what their spouse would never do, such as my favs: He would never just leave us with nothing. She would never file criminal charges against me. He would never hide his assets. She would never kidnap the kids. LOVE – isn’t it grand? Till it’s not! So let me just inform you of a few interesting legal facts. Article 585 of the Civil Code of Quebec (C.C.Q.) states that spouses [married or those in a civil union], owe each other support and as well as your relatives in direct line in the first degree, meaning your parents and children (which can come in handy depending on the case). Article 587.2, paragraph 2, of the Civil Code of Quebec (C.C.Q.) states that the Court may increase (or reduce) support where warranted by the value of either’s assets, particularly when dealing with child support. The Courts also insist on full disclosure of financial information (Article 596.1 C.C.Q.) and in all cases where child support is ordered, the parents must, once a year, exchange such information upon simple request by the other ex-spouse (or Court order if necessary). Article 7 (3) of the Regulation Representing the Application of the Act to Promote Access to Justice states: “When revising a support order, the information must be exchanged for the year the recalculation is made and for the proceeding year if the income of either parent increased during that year.” Failure by one parent to fulfill this obligation confers on the other parent the right to demand, in addition to the revised support due, damages in reparation for the prejudice suffered, including professional fees and extra-judicial costs, which can add up quite quickly! Our Supreme Court has also held, in 4 cases known as the Quadrilory – that the payer of support has an obligation to disclose and that failure to disclose can result in retroactive rulings, sometimes going as far back as to the date when the information of the increase in revenues was first known by the payor who failed to disclose. Another “strategy” used by one party attempting to escape financial disclosure is to tick off the box on the Statement of Revenues and Expenses/Budget form (which must be filed in Court) which states [under oath], that the party (he/she) “acknowledges my ability to pay the amounts claimed but deny the other party is entitled to receive same”. This does not, in my opinion, relieve the Affiant from full disclosure, although some of my colleagues hold a contrary opinion, which I believe is a disservice to their clients, given the sanctions a Court can impose as a result of non disclosure. If you receive such advice, I strongly suggest you urge your legal advisor to sign a document guaranteeing you a reimbursement of all sanctions and legal fees you will be ordered to pay if you follow this strategy. If they refuse to sign; it is a clue to the validity of such a strategy. Me Hammerschmid is a practicing Family Law Attorney since 1982 and Senior Partner at Hammerschmid & Associates, 1 Westmount Square, Suite 1290, and a founding and current member [past Secretary for 28 years] of The Family Law Association of Quebec. Frequent guest on CBC TV/Radio, CTV and CJAD on Family Law, Me Hammerschmid can be reached at [514] 846-1013 or [email protected]. Inquiries treated confidentially.
