When you are in the middle of a divorce, you will find that one of the hardest conversations will be about finances. If you have joint accounts, expect some debate as to who gets how much and why. There are opportunities for your former spouse to hide assets, too, however. They may have income you never even knew existed. Read this article on how to look for hidden assets.
Its no secret that once
divorce is on the horizon, bitter spouses can get very protective about their
assets. In situations where spouses dont share all of their financial
activities with each other, its very easy for a spouse to start
moving things around once he or she feels threatened by an impending divorce.
If youre in a high-net-worth marriage, you may suspect that your
spouse is hiding assets from you; it is not unusual for wealthy spouses
to have this suspicion.
In 2011, the
National Endowment for Financial Education, in cooperation with
Forbes.com, released the findings of an online survey. The poll found that 31
percent of people who combined finances with their significant other have
been deceptive with their spouse or partner about money.
Some of the surveys findings:
- 58 percent of respondents admitted to hiding cash from their spouse or partner.
- 54 percent of respondents said they had hid a minor purchase from their
spouse or partner.
- More than 30 percent said they hid a bill or statement from their spouse
- 34 percent of the respondents admitted to lying to their spouse or partner
about income, debt, or finances.
- 65 percent of women and 47 percent of men said their spouse or partner
lied to them about income, debt, or finances.
If spouses are already lying to each other
during marriage about finances, its safe to assume that a percentage of
spouses would be committing
more financial deception before and during a divorce. Whenever a spouse is
refusing to produce financial documentation, or delaying it continuously,
then it can be taken as a red flag. What are they trying to hide and why
are they trying so hard to control the passage of financial information?
Look at the Tax Returns First
If you suspect that your spouse is hiding assets from you, the first thing
to do is get your hands on the most recent tax return
the whole tax return. If your spouse fails to give you the entire tax return, this could be
a sign that he or she is hiding something from you. Perhaps there is something
on the tax return that they dont want you to see. If youre
not familiar with tax returns, have your divorce attorney, an accountant,
or a CPA comb through the tax return for the various types of income,
the deductions taken, and any interest or dividends earned. Also, was
there an overpayment of taxes? If so, those funds could be returned to
your spouse after the divorce is finalized.
Look at the Business Transactions
If your spouse owns a business and you have access to the financials, look
for salary paid to employees that dont exist, or checks written
to friends and family that are meant to be returned to your spouse after
the divorce. Look for strange expenditures that could have been paid to
a romantic partner, such as hotel stays, trips, fancy dinners, rent payments,
and auto loans. If your spouse owns a business, you should have the statements
reconciled with the income and expense statements; look carefully for
any possible discrepancies.
Check Your Computers Search History
Does your spouse have a PayPal account? If you dont think so, it
still may be a possibility. PayPal is a great way for deceptive spouses
to hide money from their partners because their spouse doesnt see
the transactions. If your spouse doesnt have a PayPal app on their
phone, you can check the browsing history on your home computer. Also
scroll through the search history to see if any unfamiliar banking websites turn up.
Your Spouse Could Have Hidden Cash at Home
As impractical as it may seem, a lot of people hide cash in their home
where they can easily access it but dont go looking under
the mattress because that would be too obvious. Where do you start looking?
In the garage, inside pill containers, in folders deep inside file cabinets,
in the back of dresser drawers, in shoes, in suit jackets, in air vents,
behind wall decorations and artwork, in DVD cases, in drop ceilings, under
rugs, and in storage sheds. In reality, the possibilities are endless.
Finding Assets if Youre in the Dark
If your spouse has handled all of the finances and you have not been involved
in paying the bills, filing the taxes, or otherwise tracking the finances,
then youre whats called the out-spouse. In
other words, you dont have the passwords or access to the financial
accounts, but your husband or wife sure does.
If you dont have direct access to the financial data, we recommend
asking your spouse for access to the accounts and financial records. If
your spouse is willing to give you the information you need, then the
process may not be too difficult. Unfortunately, its rarely that
easy. If your spouse is not organized, it may take some time to get the
information, but you can always help him or her.
On the other hand, if your spouse refuses to give you the information,
it could mean theyre hiding either assets or debts, or both. Remember
that with online access to virtually all types of accounts, your spouse
should be able to get the information you need. If your spouse still refuses
to produce the records, take this as a red flag that they could be hiding assets.
If you suspect your spouse is hiding assets, our firm can help.
Contact Claery & Green, LLP today for a free consultation with a Los Angeles divorce attorney.