A recent study performed by a renowned British accounting firm found that approximately 20 percent of that country’s divorces involved at least one person who attempted to conceal assets during the process. It is fair to say that a comparable – if not higher – number of American divorces involve the same kind of financial hide-and-seek. The high-profile, celebrity divorces of Hulk Hogan, Tiger Woods and Paul McCartney have all involved allegations (whether founded or not) that one party was hiding assets.
It is impossible to craft a fair and comprehensive property settlement agreement if both parties to the divorce have not put all of their financial cards on the table. That is why – regardless of whether your divorce involves a modest sum or a ridiculously large one – it is vitally important that all assets and liabilities of each party be fully and accurately disclosed. It is particularly important that spouses be vigilant about their marriage’s financial situation, even before there are signs of trouble.
Why Do People Hide Assets?
It is not surprising, but the most common reason that spouses involved in a divorce attempt to shield assets, income or real property is greed. Oftentimes that greed is motivated by feelings of spite against the other spouse, as an attempt to “make out better” than the other party at the end of the process, revenge for an affair that brought an end to the marriage or fear of a bereft financial future.
What Types of Property Can Be Hidden?
Most people think of marital property as consisting of everyday things like:
- The home
- Checking accounts
- Savings accounts
- Retirement funds
Those assets are tangible, open in nature and easily discovered, so it is fairly uncommon for such obvious property to be hidden. Other types of property, however, are more abstract in nature or are simply not considered when crafting a property settlement agreement. Uncommon but often valuable assets need to be disclosed as well in order to ensure a settlement that is fair for both parties. These include:
- Timeshares and vacation property – these are often forgotten if they have not been used in a long time
- Tax refunds, particularly those that are set to be delivered by direct deposit into a single taxpayer’s account
- Security deposits for rental property, storage units, leased vehicles and other large purchases
- Intellectual property like patents, copyrights and trademarks or royalties from any of these
- Frequent flyer miles – with airfare costs at an all-time high, frequent flyer program accounts could be valued at thousands of dollars
- Collectibles like baseball cards, art or memorabilia could easily fetch thousands (even millions) of dollars at auction
How Can Hidden Assets Be Found?
If one party is determined enough, it will take some hard work to ferret out hidden assets and income. It can be done, however. Well-known divorce specialist Jeffrey Landers and the Equality in Marriage Institute offer some tips for locating concealed assets:
- Gather as much financial information as possible including bank statements, tax returns (obtainable from the IRS only while the marriage is still valid), stock transaction reports, mortgage amounts and credit card bills to get a sense of current assets and liabilities
- Check with local government agencies (like the county assessor’s office or Department of Motor Vehicles) to see if real property or registered vehicles have been gifted
- Keep an eye out for overpayment of bills, especially credit card statements, since that is a “smoke and mirrors” method of decreasing the amount of fungible cash available for a settlement
- Unless there has been a systemic pattern at your spouse’s employer, be wary of sudden shifts in job title, decrease in salary or if expected bonuses / commissions are not received
- Examine records of family-owned businesses to ensure that money is not purposely being funneled out of private accounts for fraudulent business expenses from fictitious companies or family members
- Consider hiring a forensic accountant if the marital estate is sizable; these experts are skilled at poring over financial records to detect all manners of fraud
If you are in the midst of a divorce and you suspect that your spouse may be shielding assets in an attempt to keep you from receiving a fair property settlement, contact a skilled family law attorney in your area. Doing so will greatly increase your chances of discovering the actual value of your marital property and obtaining the settlement you deserve.