What If Your Spouse Is Hiding Assets or Income in a BC Separation?

Separation runs on numbers: what the family owns, what it owes, and what each of you earns. When one spouse holds most of that information, the other can be left negotiating in the dark, and a gap in disclosure can change property division, child support and spousal support.

You do not have to take a financial statement at face value. This guide explains the warning signs, how to keep the records you already have, the rules for getting more, and what a BC court can do when a spouse hides or understates assets or income.

Your spouse's duty to disclose, in brief

BC's Family Law Act requires each party to a family law dispute to give the other full and true information for the purpose of resolving it. That duty applies whether you are negotiating at a kitchen table, in mediation or in court. In a Supreme Court case, the Supreme Court Family Rules add a Form F8 financial statement, income documents such as the last three years of tax returns and notices of assessment, and a list of the documents a party has or has had that could prove or disprove a material fact.

The duty is continuing. If information in a financial statement becomes inaccurate because circumstances change, the party who gave it must update it promptly. Disclosure that was true in the spring can be incomplete by the fall.

Signs that disclosure may be incomplete

None of these proves anything on its own, but each is worth raising with a lawyer:

• Lifestyle does not match the numbers. Spending, travel or purchases that the declared income could not support.
• Income drops right after separation. A new job at lower pay, reduced hours, or a business that suddenly shows a loss.
• Money moving to others. Transfers to relatives, a new partner or a new account, or loans that appear from nowhere.
• Business and corporate income. Personal expenses run through a company, profits left inside the corporation, or salaries paid to family members who do little work.
• Missing accounts. Statements you know exist that are not listed, including investment, foreign or cryptocurrency accounts.
• Low valuations. A business, vehicle, collection or property listed well below what it seems worth. Family property is valued at fair market value, generally as of the date of the agreement or the hearing.

Keep the records you already have

The earlier you organize, the easier it is to show what is missing. Make copies of documents you can properly access, such as joint bank and credit card statements, tax returns you filed together, mortgage and loan applications, property assessment notices, and records from the family home. Write a short timeline of major purchases, transfers and changes in work.

Do not destroy or alter anything yourself, including your own records. Your disclosure obligations are the same as your spouse's, and the consequences described below can apply to either of you. Be careful about logging into your spouse's private email or accounts without permission; ask a lawyer first.

Tools to get the information

In a Supreme Court case, the Supreme Court Family Rules give you several ways to pull documents out:

• Demand for documents. If a list of documents leaves out records or classes of records that should be there, you can serve a written demand. The other party has 35 days to comply or explain, and you can then apply for an order.
• Demand for particulars. If a Form F8 financial statement lacks enough information, you can demand particulars. If they are not provided within 7 days, the court can order them or a new financial statement.
• Records held by others. The court can order a bank, employer or other non-party to produce documents, on an application with notice to that person.
• Examination for discovery. Your lawyer can question your spouse under oath. The default limit is 5 hours, and the court can extend it, considering factors such as evasive or incomplete answers.

Under the Family Law Act, a court can also order disclosure at any stage of a proceeding and order one party to pay the expenses of complying. Where a business or complex income is involved, a lawyer may recommend a business valuator or forensic accountant to trace funds and test the numbers.

Protecting property while you sort it out

If you are worried that assets will be moved or sold before they can be divided, the Supreme Court can restrain a spouse from disposing of property at issue. On a spouse's application, the court must make that order unless the other spouse shows that the claim will not be defeated or adversely affected. The court can also make orders for the safekeeping and preservation of property, and it can make these orders before the application is served on the other spouse. Our article on a spouse who drained the joint account after separation covers these orders in more detail.

What courts can do when a spouse hides or understates

The Family Law Act gives the court a range of responses when a person fails to follow a disclosure order or the rules, or gives incomplete, false or misleading information. The court can:

• draw an adverse inference against that person, including attributing income in an amount it considers appropriate;
• require a party to give security;
• order the person to pay the other party's expenses caused by the non-disclosure;
• order payment of up to $5,000 to or for the benefit of an affected party, spouse or child, or a fine of up to $5,000; and
• make any other order it considers appropriate.

For child support, the Federal Child Support Guidelines, which apply in BC family law cases, let the court impute income where, for example, a parent is intentionally under-employed, has diverted income, deducts expenses unreasonably, or has failed to provide income information when required to. Income figures also drive spousal support, which our spousal support guide covers.

On property, the court may order an unequal division where equal division would be significantly unfair. One factor it can consider is a spouse who, other than in good faith, substantially reduced the value of family property or disposed of or transferred it so as to defeat the other spouse's interest. And under the Supreme Court Family Rules, a party who fails to disclose a document generally cannot use it later in the case without the court's permission.

If you already signed an agreement

Finding hidden assets after you sign does not always end the matter. The Supreme Court can set aside or replace all or part of a written property agreement (usually one with each signature witnessed) if, when the agreement was made, a spouse failed to disclose significant property or debts, or other information relevant to the negotiation. The court may decline to act if its order would not be substantially different from the agreement. It can also order the other party to pay expenses of the family dispute resolution where non-disclosure was knowing and the agreement is set aside. The application generally must be made within 2 years after you first discovered, or reasonably ought to have discovered, the grounds. Our article on separation agreements and when they can be set aside explains the other grounds.

Worried the numbers are incomplete? Get advice before you settle

Our family lawyers can review the disclosure you have received, identify what is missing, and use demands, court orders and valuation or accounting evidence to get the full financial picture.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.