Many spouses believe and fear that they may get taken advantage of during the divorce process. Chiefly, they may worry that their spouse may hide or misrepresent assets that need to be split. Keeping involved in the family finances can usually alleviate these fears; as well as,the use of joint bank accounts, sharing login information for financial accounts online, and reviewing financial records as a couple. Below is a quick reference guide for all the information you need:
What Type of Assets Are Usually Hidden?
Generally, money is being hidden. That money can be in the form of cash, but could be disguised as other assets. These assets include stock, real estate, investment accounts, trust accounts, offshore accounts, high-value goods, and bonuses, among other assets.
How Are Assets Hidden?
Unfortunately, it is very easy to hide assets today. Almost all financial transactions can be conducted online with no paper trail and no statements being mailed to the home. A spouse could transfer cash or valuables to a trusted friend or family member or create a trust to hide the money. A spouse could gift items using marital monies to a friend or family member. He or she may negotiate a business arrangement to hide assets through that business. If the spouse owns a business, he or she could use the business to prevent money from being distributed as income or create unnecessary expenses. Or the spouse could simply bury the money or keep it in a safety deposit box.
With the overwhelming trend toward paperless statements and electronic convenience, the possibilities are endless for a clever spouse to conceal assets.
What Signs Should You Be on the Lookout For?
Look for changes in your spouse’s behavior or trends in their income. Is your spouse becoming more defensive or secretive about money? Money may become a bigger issue in your marriage if your spouse is concealing something. They may begin to complain about business being slow. A sign may be that, in spite of claims that business is slow, the business continues to hire new employees. Your spouse may also have a sudden decrease in salary.
If your spouse is utilizing offshore accounts, their international travel may have increased. Or they may have hastily asked you to sign off on paperwork without giving you the opportunity for a thorough reading. New bank accounts may get opened without an explanation or statements that typically come in the mail may cease. Your spouse may also change habits for storing and maintaining financial information, such as removing tax software from computers or keeping files locked away.
Additionally, certain personal habits can be red flags that your spouse may attempt to hide assets. If your spouse has a history with drug abuse or gambling addiction, these could be motivation for your spouse to hide assets. While not every divorce involves inappropriate financial behavior, it is important to make sure you are getting a fair deal.
How Can Hidden Assets Be Discovered?
It is important to consult with your attorney if you are suspicious of your spouse hiding assets. Your attorney has a great deal of resources to track down hidden funds.
One such resource may be a forensic accountant. Forensic accountants have experience analyzing suspicious activity and finding hidden funds. While your CPA or financial advisor has a limited influence on your finances, a forensic accountant can assess trends and follow leads across your spouse’s entire financial footprint. They will try to determine an accurate income for your spouse using a lifestyle analysis and reviewing tax and other records. Their work is protected from being shared as work product, but may be used by your attorney as evidence in litigation. While a forensic accountant is effective, they are typically not cheap; ranging in cost from $200-$400 an hour.
Additionally, your attorney will want all of your financial records. This includes bank records for checking and savings accounts, loan applications, credit card statements, information concerning safety deposit boxes, records for investments, and records for retirement accounts. Your attorney will also have questions concerning any deceased family members related to you or your spouse. The estate file for these relatives will be public record but may further illuminate your spouse’s financial footprint.
Your attorney may advise you to review your spouse’s passport for foreign travel. You can review airline accounts and any airline or hotel reward accounts. Review phone and email records. Your attorney may wish to question co-workers and supervisors about these travels. Additionally, the IRS has resources available to help you investigate suspected foreign activity.
What If I Discover Hidden Assets After My Divorce?
There are ways to protect you even after a divorce decree has been entered. Divorces often end with a separation agreement. These agreements typically contain language that states all assets have been disclosed. Your attorney may wish to add language to the agreement imposing a penalty if there has not been a complete disclosure.