The market is hot, and you are sitting on a significant profit in a particular investment. With divorce on the horizon, the temptation to cash out before your spouse can claim a portion can be strong. Still, before you make that move, it is critical to consider the potential legal ramifications of selling assets before a divorce.
Indiana law on asset distribution
Indiana follows an “equitable distribution” approach to dividing marital property. The law presumes an equal 50/50 split as fair, but judges may adjust this based on multiple factors.
Selling assets without your spouse’s knowledge or consent raises red flags in Indiana courts. The state recognizes all property acquired during marriage as subject to division regardless of who holds the title. This applies to real estate, retirement accounts, business interests and personal items.
Actions that may trigger legal issues
The court examines asset transfers carefully, particularly those occurring close to filing. These actions may constitute “dissipation” of marital assets:
- Selling property at below-market value
- Transferring assets to friends or family members
- Making unusual or excessive gifts
- Spending marital funds on non-marital expenses
- Creating new accounts your spouse cannot access
- Deliberately hiding income or assets
Judges take a dim view of attempts to deprive a spouse of their fair share. When calculating the final division, the court has the authority to “add back” the value of improperly sold assets. This means you gain nothing by trying to hide or liquidate property.
In severe cases, the court may compensate your spouse for a greater percentage of the remaining assets. You might also face contempt charges, financial penalties or responsibility for your spouse’s legal fees.
Protecting your interests during divorce
Financial transparency often serves your best interests during a divorce, and there must be a legitimate reason if you must sell assets. A skilled attorney can help determine whether this action will benefit your financial future or bring long-term consequences to your case and reputation.