This article looks at why people hide assets during divorce and how to go about uncovering them.
Financial dishonesty is a lot more common in marriage than many people may believe. As CNBC reports, a recent study found that 7.2 million Americans admit to having opened a bank account or credit card without their spouse or live-in partner’s knowledge. A further one-in-five Americans say they have purchased an item worth $500 or more without telling their partner. That sort of widespread dishonesty suggests that people who are going through a high-asset divorce should be particularly concerned about the possibility of their former spouse concealing assets.
The need for full financial disclosure
In a divorce one of the most important steps a couple will have to complete is a division of their marital property. For this property to be divided fairly, it is important that each spouse knows what is actually available for division. That’s why both spouses are required to be completely upfront about whatever assets and liabilities they own.
However, perhaps not surprisingly, some people do try to hide assets from their soon-to-be former spouses. By concealing assets, the size of the marital estate appears to be much smaller than is actually the case. That, in turn, means that the spouse concealing the assets can come out of the divorce in much better financial shape than the other spouse.
Finding hidden assets
While hiding assets from a former spouse during a divorce constitutes fraud and is illegal, many people do try to get away with it. As Forbes points out, there are a number of especially popular ways to hide assets and knowing what these methods are can be the first step towards uncovering them.
The former spouse, for example, may be underreporting their income, accepting cash payments for their work, or concealing cash in a safe deposit box. These tactics are especially common if the duplicitous party runs their own business, which makes it easier to hide assets, inflate expenses, or depress income. Another trick is to deliberately overpay the IRS and then wait until after the divorce has been finalized in order to receive the refund. They may also have purchased expensive items, like art or collectibles, that are hard to value or easily overlooked.
Getting legal help
For those who suspect a former spouse may be hiding assets, it is important to talk to a family law attorney as soon as possible. Even if assets are being concealed, uncovering them will usually require both a forensic accountant and an attorney who knows how to hunt for hidden assets without violating privacy laws. An experienced attorney can assess their client’s situation and, if necessary, put them in touch with a forensic accountant and help them get a fair settlement from their divorce.