Despite complications to the marriage, most people enter the divorce process believing their soon to be ex-spouse is an honest person. Unfortunately, this is not always the situation. The fact is, dishonesty is a common reason for seeking a divorce. Even if you have no reason to suspect your former partner is dishonest, there is still good cause to be curious and concerned about their finances heading into a divorce.
Once a divorce begins, many people will do whatever it takes to conceal and hold on to what they believe is their assets or their money. Moreover, some will even create secret accounts or perform other financial actions during the course of the marriage. Discovering these hidden assets during a divorce is essential to ensuring that you receive a fair settlement.
You should never rely entirely on your spouse’s Financial Statement. The good news is that an experienced divorce attorney has many tools at their disposal, including a forensic accountant or other investigators and can uncover most everything during the discovery process.
The hiding places for some assets are predictable. These are some of the more common:
1. Family and Friends – Your ex-spouse may conspire with family or good friends. This is often done by making payments for imaginary items or services, then getting reimbursed after the divorce. An experienced attorney will scrutinize payments made by both personal and business accounts.
2. Fake Employees – Having a fake employee on the payroll is a common technique for concealing the money generated by a business. While your ex-spouse may think they are being slick, an audit of their payroll will uncover the truth.
3. Unreported Income – Does your ex-spouse work in a cash business? Some people believe they can keep their true income hidden by excluding revenue from their financial statements. However, lifestyle costs often reveal the truth.
4. Collectibles – One way to hide money is investing in antiques and artwork, or even comic books and baseball cards. These items are often bought over the course of the marriage, and then the value is under-reported during the divorce.
5. Delayed Compensation – Your ex-spouse’s stock options, raises, and bonuses are all included in a divorce. However, if your ex-spouse has a friendly boss, they can conspire to delay promotions or payments of bonuses.
6. Custodial Accounts – One of the most devious methods of hiding money is setting up a custodial account in the name of one of their children. While this is hiding assets from the court, they are basically gifting the assets to their child. This can mean that, if they eventually take the money back, they are stealing.
In today’s world, many couples have very complicated and difficult to understand financial portfolios that may include businesses that need to be valued, retirement plans, pensions, mutual funds, stocks, vacation properties, and more. While the focus during a divorce will be on dividing those assets in a fair and equitable manner whether through settlement or after a divorce trial, there is also a need to make certain that all marital assets are fully disclosed or discovered so that you are ensured that you are obtaining a just result.
If you’re considering divorce and have concerns about the possibility of hidden assets, we encourage you to call our office and schedule an appointment.