I Think My Spouse Might be Hiding Assets, What Should I Do?
If you are facing a divorce, one of the major issues that needs to be settled is the division of marital assets. All assets that are part of the marital estate are supposed to be divided in a fair and equitable manner. But what if some of these assets are missing?
If a spouse has been thinking about getting a divorce for a while, they may have already taken steps to conceal the existence of various assets so they will not have to share them with you. Maybe your spouse is naturally secretive and dishonest with you. That may even be one of the major reasons your marriage is dissolving, and this has made you suspicious about the extent of the assets they truly have versus the limited ones they are disclosing.
The first point that should be made is that, generally, divorcing spouses are pretty honest about their assets. They are usually informed by their attorneys about the repercussions of getting caught hiding assets and the penalties the court can impose on them. This may include getting a lower share of the marital property and/or being required to pay the other spouse’s legal fees.
So, assuming you and your spouse are both working with reputable divorce lawyers, there is a pretty good chance that, even if your spouse was thinking about hiding some assets, they will ultimately reconsider after learning what the consequences might look like.
All of that said, you know your spouse better than most people, and if you suspect that he/she might be hiding assets, then this is not something you should ignore. There are spouses that do try to conceal assets because their belief that they are entitled to more clouds their judgment, or they just think they are smart enough to get away with it.
The good news is that spouses usually conceal assets in predictable places, and in today’s electronic age, it is much easier for experts to uncover these hidden assets. Here are some of the most common ways a spouse might try to hide assets:
- Expensive Cash Purchases: A spouse may try to convert cash into an expensive asset, such as artwork, jewelry, watches, high-end furniture, etc. with plans to sell and liquidate it again after the divorce is over. These items may be stored at an office, with a family member or close friend, or in a safe deposit box at the bank. Or the spouse may just try to undervalue or ignore the asset, hoping you will overlook it.
- Unreported Income: If your spouse is involved in a business, particularly one that deals with a lot of cash, he/she may try to pocket the cash without reporting it on the business’s financial statements and tax returns. If your spouse seems to always have a lot of cash on hand and your standard of living seems beyond your means (based on your reported income), then there is a strong possibility this may be occurring.
- Delayed Bonuses or Stock Options: If your spouse receives bonuses or stock options from an employer, he/she may seek to delay receipt of these assets until after the divorce is finalized, so you will not receive a share of it.
- Fake Purchases: Some individuals go so far as to set up schemes where they pretend to purchase a product or service from someone they know. They send funds to the other party with the understanding that the funds will be returned to them after the divorce.
- Phony Debt Repayments: Similar to the fake purchase scheme, a spouse may claim that they owe a debt that does not exist to a family member or friend. Again, they “repay” the phony debt to this person with the understanding that the funds will be returned after the device. This can be seen in the form of a family member covering the spouse’s attorney fees and drafting a promissory note that they will be repaid after the conclusion of the divorce.
- Assets Purchased by a Family Member or Friend: A spouse may give cash to a family member or friend and have them purchase an expensive asset. This could be anything from a piece of jewelry to real estate property. Since the asset is in the other person’s name, the spouse assumes that it cannot be traced back to them.
- Wages Paid to Nonexistent Employee(s): When a spouse owns a business, there are numerous schemes that can be used to try to funnel money out of the marital estate. One of the most underhanded schemes is to issue paychecks to a fake employee. The payments are shown on the financial forms, but the business owner spouse keeps the paychecks and the money never really leaves their account. Then, after the divorce, all they have to do is void the checks because they were never cashed.
- Accounts in a Child’s Name: Children are issued a Social Security number (SSN) at a very young age, and a spouse may try to hide cash by setting up a custodial account using the child’s SSN. Then after the divorce, they simply withdraw the money, close the account, and hope no one ever finds out about it.
What Should I Do If I Think My Spouse is Hiding Assets?
There are many ways to discover hidden assets during a divorce:
- Review your Financial Accounts: It is important to do a thorough review of every financial account you have access to. Look through your checking, savings, retirement, and other accounts for red flags and troubling signs. In particular, look for unusual and unexplained large cash withdrawals and fund transfers. Go back as far as you are able to as some spouses plan these schemes well in advance.
- The Discovery Process Will Help: During the divorce discovery process, you and your lawyer have the right to ask for all information and documents that are relevant to your case. This gives you access to far more private information than you would be able to get a hold of otherwise, and this should help you track down any hidden assets, or at least alert you to areas you will need to take a closer look at.
- Ask the Court to Intervene: If, through the discovery process, you have reason to believe that your spouse is hiding something, you can ask for a court order to turn over specific information and documents. Violating a court order can result in severe consequences, so your spouse will be motivated to comply.
- Hire Outside Experts: There are times when outside help might be required to track down assets that have been hidden. Two invaluable resources a divorce lawyer can call on for this purpose are private investigators and forensic accountants. If all else fails, these experts can usually get to the bottom of what your spouse is hiding.
The Importance of Working with Strong Legal Counsel
Divorce has a tendency to bring out the worst in people, and there will always be individuals who think they can pull one over on their spouse, the court, or both. This is why it is very important to have a good understanding of all of your household finances, and to retain an experienced attorney to handle your divorce. By working with a skilled attorney, you will feel at ease knowing that your rights and interests are being fully protected throughout this difficult process.