How to Find Hidden Assets and Income
It is not uncommon for divorcing spouses to hide information about assets or income from their soon-to-be former partners. Because the divorce process can be emotionally charged, the level of suspicion of dishonest or unfair behavior can be high, making it an impediment to the fair and expeditious resolution of other divorce-related issues.
The discovery process is important because it discourages practices such as this in divorce. If a spouse is found to be untrustworthy, his or her credibility in court can be negatively affected, and sanctions or penalties can sometimes be imposed. Alternatively, if no unfair practices are discovered, both spouses will likely be able proceed with greater trust and confidence in the divorce process.
Divorce Analytics strongly recommends a rigorous discovery process, including a thorough analysis of all potentially relevant financial documents, including bank, retirement and investment statements, loan applications, employment agreements, insurance policies, etc. and, where appropriate and cost-effective, a lifestyle analysis, historical review of tax returns from previous years, detailed historical budgets, demands for discovery and inspection, interrogatories, subpoenas and depositions. In many jurisdictions, divorcing clients are also required to prepare a financial affidavit (termed a Statement of Net Worth in New York). The parties Statements of Net Worth are prepared early in the process and in New York are usually exchanged at a Preliminary Conference. They are continuously updated during the divorce process and become central to the entire case.
All of the above processes and services are offered by Divorce Analytics as part of our Excellence in Divorce Number Crunching™ process.
Some Red Flags That Suggest Your Soon-To-Be Ex-Spouse May Be Hiding Assets Or Income
Below are some red flags that suggest your soon-to-be ex-spouse may be hiding assets or income. Be on the lookout for changes in behavior that suggest financial infidelity might be occurring. Keep a diary and consult with a professional in divorce finance if you suspect think this might be occurring. Some changes may be obvious, others not. In a recent case, the husband opened a bank account in his name only, changed the withholding tax at his job and had the (large) tax refund checks wired to his new account. In another, the husband deferred some of the income he had been drawing from his company and exchanged it for an officer loan that did not appear on his tax returns. These are just two of many possible examples of financial infidelity in divorce.
- Your spouse unexpectedly tells you his or her company has fallen upon hard times, and this has resulted in a significant decrease in his or her compensation.
- Your spouse never seems to have money.
- Your spouse is urging you to refinance or pull money out of the equity in the house.
- Your spouse becomes secretive, angry or defensive and does not want to engage in discussions with you about money.
- Your spouse suddenly starts accusing you of overspending.
- Credit card, bank and investment statements and other financial documents stop being delivered to your home.
- Your spouse asks you sign tax returns, loan applications or other financial documents without giving you the opportunity to discuss or review them.
- Your spouse’s spending patterns, in one extreme or the other, suddenly change.
- ATM withdrawals by your spouse have increased in volume and amount.
Hidden Income Can Negatively Affect the Workability of a Divorce Settlement or Determination
Income Available for Support frequently plays a role in the amount and length of alimony/maintenance, child support or other divorce-associated obligations. If a settlement or court-ordered determination is not fair or workable, the financial consequences can be serious. Unfortunately, once these determinations have been made, they are extremely difficult and costly to change. It is therefore important that issues associated with these obligations are addressed with great care.