In a divorce, you might suspect that your spouse is not fully honest about their financial status. They might be finding ways to hide assets. However, you can take strategic steps to uncover these hidden assets. In this guide, we’re going to delve into finding hidden assets in divorce, providing you with practical tips to ensure a fair settlement.
Start With a List of Known Assets
One of the first things you and your spouse should be doing is make a list of all assets owned by both of you. They will fall into three main categories, such as marital, separate, or comingled, and an attorney can help you sort them out.
If Your Spouse Has Controlled the Assets During Your Marriage
It is not unusual for one spouse to have been in charge of bookkeeping, paying expenses, taxes, etc. during the marriage, most likely because that spouse is more of a financial expert. If you are a non-financial expert, this can mean that you lack certain financial facts about your assets and debts. This places you at a distinct disadvantage.
First, ask your spouse to show you all financial documents, from bank accounts to tax returns, to retirement accounts, to loan papers, and more. If he or she cannot lay their hands on the necessary papers immediately, the relevant institution can forward them.
How Assets Can Be “Hidden”
While hiding assets isn’t all that unusual, there are only a few methods used by the average spouse.
- First, your spouse may simply deny any missing assets exist.
- Your spouse may transfer ownership of the asset to a third party, such as a trusted relative.
- He or she may claim the asset/document simply cannot be found.
- Your spouse may work with a trusted friend or relative to create a false debt. A typical method is creating a fake loan. The borrower makes payments which get returned after the divorce. Criminals call it money laundering, married people call it hiding cash.
- You need to scrutinize a list of salaries and business expenses if your spouse owns a business. Do these employees really exist? All business expenses should have a receipt for tax purposes. If your spouse cannot produce receipts, there may be a problem.
Tracing deliberately hidden assets might seem challenging. But the discovery process can reveal a lot, as most actions leave a paper trail.
A tax advisor should check several years of past tax returns. They have the training to spot discrepancies and undisclosed income.
If Your Spouse Won’t Produce All Financial Records
Unfortunately, some spouses don’t want all the financial information from being available because they may have hidden a few assets in the larger marital pot.
Deciding if assets are marital, separate, or comingled can be a legal maze. In such an event, you should be consulting with a divorce attorney, who will most likely refer you to or consult with an accountant.
If there is any doubt about what the assets are, your attorney will probably conduct a “discovery” before going to court. The discovery process aims to uncover undisclosed information. It employs several methods to extract information from the opposing side. These methods include but aren’t limited to the following:
- Your attorney demands that your spouse produce a list of named documents, such as tax returns, bank accounts, or valuations of certain assets. If your spouse refuses, a judge can order him or her to do so and can punish your spouse for continued refusal to obey an order of the court.
- Your attorney can conduct an interrogatory, usually in writing. Interrogatories, true to their name, involve legally obligating your spouse to answer specific questions.
- If a property is in question, your attorney might request an inspection. This could involve a safe deposit box, a piece of art, or anything else of value.
- Your attorney might request an oral deposition. This happens in person, unlike an interrogatory, and we get spoken responses, not written ones. Your spouse must be present during such a deposition. Such a deposition takes place in the presence of your spouse, his or her attorney, and a court reporter who takes down the testimony. Parties swear to tell the truth during this under-oath process.
This discovery process will likely produce some evidence of hidden or undervalued assets. We expect your spouse to answer all questions honestly, or they could face perjury charges. Lying during discovery is a serious offense.
A divorce is rarely a friendly event. Frequently, both parties want to cling to as many assets as they can, either because they feel they deserve it, or out of spite. With the help of a good divorce attorney and tax accountant, you can eliminate most ways in which spouses keep assets hidden.
The legal process can get difficult, which is why we always recommend that you seek the assistance of counsel; or at least have a consultation. Schedule a consultation with one of our attorneys today to review the issues of your case, the legal options you may have, and certain rights that pertain to your unique situation.
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