In a divorce, it isn’t uncommon for one or both spouses to try to hide assets, especially in high net worth divorces. Unreported or hidden assets are often alleged by the spouse who isn’t the main earner, and if found to be true, the court can punish the guilty spouse. If a divorce has been planned by one spouse, they may have stashed away income or assets for themselves before filing for divorce.
Finding these assets can be difficult, but if you suspect that your spouse has been hiding assets or failing to disclose income, you and your attorney can investigate for signs that this is true. It can be time-consuming, complicated, and expensive to uncover hidden assets or unreported income, so you must first decide how much you can afford to spend on the discovery.
There are two levels of discovery. The first is the formal level, which uses legal procedures, such as deposition, interrogatories, subpoenas, requests to produce, and motions to compel. This level uses the power of the court to uncover your spouse’s activity. It can provide you with information to analyze and decide if there is enough evidence to justify a more thorough investigation. The next level of discovery traces the ownership of assets and can show you where they’ve been hidden with third parties or companies to avoid detection.
How Can Assets Be Hidden?
There is a staggering array of ways assets can be hidden, so it may take some serious digging to discover your spouse’s method. You may already have an idea of where to look, however. If not, here are some common ways that individuals try to conceal assets.
Third parties. Often people will try to hide assets with family or friends, who may not be aware of their involvement with the deception. Personal possessions or investment certificates may be secured in safe deposit boxes under a friend or family member’s name. Assets may also be transferred to other people, as well. Your spouse may also gift large sums of money to others, under the agreement that it will be returned after the divorce.
Paying Off Debts. They also may hide income by paying off legitimate debts, like a mortgage or credit card balance. Others will pay off fake debts to friends or family to transfer the money out of the marital funds.
Custodial Funds. Your spouse may also invest in custodial funds, such as education funds for your children, or retirement funds like pensions, 401(K), or Keogh plans.
Employers. Employees may work with their employers to delay raises, contracts, or bonuses until after the divorce to avoid the value of these being included in the settlement.
Businesses. There are many ways that a business owner can use the company to hide assets. Skimming cash, paying salaries to nonexistent employees, or paying family or friends a salary can be used to hide funds. Your spouse may also delay signing lucrative contracts or underreport tax returns and financial statements to artificially decrease the value of a business in the divorce.
Locating Hidden Assets
Uncovering hidden assets is a highly involved process, and it is best to hire professionals who are experienced in handling cases like yours. Your attorney can be a key asset to your investigation, but a forensic accountant is trained to examine records for missing information and uncover discrepancies. You can provide useful information about your spouse’s activities, family and friends, and employment.
Your investigation will likely include the following sources of information:
- Income tax returns
- Savings accounts
- Money market funds
- Checking account statements and canceled checks
- Lifestyle analysis
- Cash flow procedures for their business
- Credit card statements and receipts
- Credit reports for all open accounts
- Insurance statements
- Bank statements
- Offshore accounts
- Loan applications and personal net worth statements
- Public records
Armed with the information these documents and searches can uncover, your team can piece together your spouse’s financial activities and uncover any issues in reporting. While you may not find the exact amount that has been hidden, the clues you uncover could be enough to demonstrate that your spouse has been dishonest and invoke court action to settle your divorce fairly and punish your spouse for their attempts to hide assets.
If you suspect your spouse is hiding assets from you during your divorce, you need representation that will work tirelessly to ensure that you receive your rightful settlement. Our Altamonte Springs divorce lawyer can protect your rights and help you uncover your spouse’s deception. With over 25 years, Attorney Russell S. Hershkowitz is a seasoned legal advocate, and can be trusted to defend your interests. Contact the Law Office of Russell S. Hershkowitz, L.L.C. today to schedule a free consultation.