Is Your Spouse Hiding Assets From You
Even if you think you have a legal claim to an asset, there can be consequences for attempting to conceal assets from your spouse. Hiding assets during divorce proceedings occurs more than you might think even though it can result in stiff penalties for the spouse responsible. Here are some of the ways that your spouse might be hiding assets from you.
Physical Possessions
It can be easy to hide expensive collections – or even just parts of them – such as art, guns, stamps, or coins. The value of furniture or other antique items can also get overlooked during the tallying of assets and the subsequent divorce proceedings. Spouses who own their own business may also underreport the number and value of corporate physical assets in order to downplay the value of their company.
Unreported/Delayed Income
If your spouse gets paid completely or partially in cash, he or she may be able to hide this income and not report it. By doing so, you would have no knowledge of the income to have it included during the proceedings. Additionally, some people who are in the process of getting a divorce or who are contemplating divorce might try and have their income deferred or reduced. By waiting to receive income, bonuses or stock options until after the divorce is complete, your spouse may be able to hide income that was earned during your marriage and to which you are entitled. If your spouse owns a business, he or she may have pushed off signing a lucrative contract with a client or delayed receiving or depositing funds in order to decrease the value of the company and their overall own net worth.
Abnormal Cash Withdrawals/Unknown Accounts
You can check all bank accounts that you know of to see if there have been any large or abnormal cash withdrawals. Some people have also tried to hold cash in traveler’s checks until their divorce is finalized. Your spouse might also have taken out cash in order to buy government bonds such as series EE savings bonds, which are, unfortunately, a fairly easy way to hide money since they do not have to be registered with the Internal Revenue Service. Some spouses also have separate bank or retirement accounts that their spouses know nothing about.
Suspicious Gifts/Fake Debt Repayment
A court will look suspiciously on most large gifts that were made leading up to a divorce, especially those made to family members or children of only one of the spouses. Any gifts to or purchases made for a spouse’s lover will also be closely scrutinized. Still other people may “repay” debts to friends or family members even though these debts never existed prior to the topic of divorce coming up. After the divorce process is complete, these family members will then return most if not all of the “debt repayment.” A spouse who owns a business might try to make expense or payroll payments in advance in order to temporarily decrease corporate assets.
What to Do If Your Spouse is Hiding Assets
If you suspect your spouse of hiding assets during a divorce proceeding, you can feel powerless. Since this is such a common problem during divorce, there are many checks and balances in place during the proceedings that help to prevent the honest spouse from being taken advantage of by their spouse. There are some steps that you can take in order to protect yourself and your rights – even before you officially start the divorce process.
Keep Records
Try to document your financial situation in as much detail as possible. If your spouse usually keeps the records and will not provide you with copies, you can ask the bank or other account-holder directly. Just because your spouse is hiding assets it doesn’t give you the right to hide assets as well – even if the asset is something like inheritance that was given to you only and to which you will most likely be completely entitled to after the divorce. Despite your best efforts to monitor financial activity in your marriage, there may still be factors that are beyond your control, especially if your spouse has opened an account without your knowledge or is underreporting assets. Fortunately there are ways to overcome this dishonesty.
The Discovery Process
Discovery is the legal process during which you and your attorney get to ask your spouse multiple questions and request multiple documents regarding your finances. Your spouse is required to answer honestly and not hide documents, unless your spouse’s attorney can assert a valid legal reason why your spouse should not answer, such as a question being irrelevant or a document being privileged. During this process, your attorney may ask your spouse such questions as whether or not he or she has other accounts or has information regarding certain expenses. Typical document demands include requests for copies of tax returns, contracts, business files if your spouse owns a company, and other accounting records. Via the discovery process, you may also obtain the right to physically inspect property such as a safe deposit box. You may subpoena your spouse in order to get a sworn deposition, and you may also be able to bring in your spouse’s boss or other people knowledgeable about his or her income to get your questions answered. You can even request account information from banks and other institutions, and they are legally required to provide this information. The discovery process is beneficial because a court has the ability to enforce an order for production and also has the power to impose sanctions if your spouse does not comply honestly.
Other Professionals
Once you have received all of your spouse’s answers and documents, there is still the gargantuan task of sifting through everything and seeing where information could be hiding in plain sight. For example, a tax return may look straightforward until you notice that your spouse has a carryforward tax credit that will be available next year or that he or she has been overpaying taxes intentionally in order to downplay income and get a large return once you are divorced. Fortunately, analyzing this data will not be your responsibility alone.
With the guidance of your attorney and possibly a forensic accountant who specializes in this area, you will be able to find even the slyest attempt to hide assets. Even if you do not suspect your spouse is hiding assets, it’s good to get peace of mind and make sure your divorce is handled correctly.
In order to make the divorce proceedings go smoothly, it is important to track your finances as closely as possible and gather as much documentation as you can. Also, make sure that you are not hiding any assets. For help with all aspects of your divorce, call the Law Office of Renkin & Associates. Our attorneys have experience in all areas of family law and are ready to fight on your behalf. Contact the Law Office of Renkin & Associates today for representation in your case.