What to do if you think your Spouse has Hidden Assets

Hidden-Assets

There was a woman in California who won $1.8 million in the lottery. She filed for divorce from her husband of 25 years and failed to disclose her windfall. But the husband found out about it and the judge granted him all of her lottery winnings.   Failing to disclose all of your assets during the divorce proceedings in a no-no and you may end up with a far worse judgment than you would have if you were honest. That said, what do you do if you think your spouse has hidden assets that weren’t brought up during the divorce proceedings? One thing you can do is hire a forensic accountant to investigate. You can find them online via a Google search, or even in the phone book. Your divorce attorney or accountant may also be able to recommend one as well. These are special accountants who know how to search for hidden assets. But what if you don’t have the financial wherewithal to hire someone like that? During the discovery process, your divorce attorney can do a lot of things to have these assets discovered. If you can’t count on your ex you certainly can’t rely on their financial affidavit. Your attorney should review the following documents carefully: pay stubs, bank statements,   tax returns, cancelled checks, credit card statements, brokerage statements and any other financial statements.  Each document should be scrutinized carefully to extract the proper information.

Here are some things you can do to make sure you have the best chance of bringing all of your ex-spouse’s assets to light. First, take a good look at the tax return, the 1099 and the brokerage accounts. Has all interest and dividends been disclosed? Next, run a public records search on your ex’s name. Do they own any property that perhaps wasn’t brought up? Now it’s time to look at your former spouse’s pay stubs and other documents. Take a good look at the bank statements. Is all the income accounted for? Does all income have a record of deposit? For example, if your ex makes $10,000 per month but there is only a record of $3,000 being deposited per month, where has the other $7,000 gone? Now it’s time to look at any cancelled checks. Check out the bills which they pay. Look at mortgage or rent payments, credit card payments, auto loans, utilities and others. Are there any bills being paid from a different account than that which you have knowledge of? If you believe the funds for these bills are coming out of a separate bank account of which you have no knowledge, your previous spouse may be hiding assets. Next, have your attorney subpoena your spouse’s employer to request to find out what kinds of benefits your ex has such as stock options, a 401K or some other retirement plan or a deferred compensation plan. These should also be included during the disclosure of finances phase. If they haven’t, let your attorney know and he or she should make sure that it is included.

Check out the monthly income disclosed. Now take a look at the family expenses and add them up. If the income is lower than the expenses, consider whether you and your ex-spouse were dipping into savings or some other area in order to make ends meet. If not, there is likely financial assets that aren’t being disclosed. Look carefully at the account statements. Look for transfers or withdrawals that don’t seem to end up anywhere else. Your attorney may need to subpoena back documentation to see where and in whose account the money ended up. Look over canceled checks, wire transfers, credit card statements, purchases of significant items such as works of art, jewelry, antiques and so on which may not have been disclosed. Look for cancelled checks, wire transfers, or payments on credit card statements that go to insurance or property taxes on a property other than your own home. This can indicate undisclosed real estate. If you discover any of these inconsistencies it may now be time to depose your ex-spouse. They can’t lie under oath or they will face sanctions. Now you can ask about bills being paid out of secret accounts, property taxes being paid on real estate you didn’t know about or whatever you had discovered. Divorce can be a very painful, high anxiety affair. But it pays to keep your head about you and protect yourself. The outcome of the divorce proceedings can affect your life for years to come. So it’s important that you and your attorney have access to all the information you need in order to safeguard the best outcome possible. For more on this topic, read Forensic Accounting for Divorce Engagements: A Practical Guide, Third Edition by Donald A. Glenn and Ezra Huber.

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