While financial secrecy is often cause for trouble during marriage, it can be even more problematic when divorce is imminent, especially when there is valuable personal property or the couple has numerous bank and retirement accounts. If you are drawing up papers and are concerned about the potential for shady practices regarding your marital property, be aware of these common tactics used to hide assets.
Common ways assets are undervalued or disguised
If you discover these following behaviors, it could mean your spouse is attempting to conceal something in preparation for property division:
- Undervaluing antiques, collectibles, tools or artwork
- Failing to report income on financial statements and tax returns
- Repaying a phony debt to a friend or family member
- Opening a private retirement account
- Colluding with an employer to postpone raises, bonuses or stock options until after the divorce is final
- Keeping cash as travelers' checks
- Opening a custodial bank account in the name of a minor child
Transferring investments to a family member or separate entity until after the divorce is one of the most common ways that spouses hide money or assets.
Business owner tactics
If your spouse is a business owner, he or she may try to keep the true financial picture from being revealed in the following ways:
- Paying a salary to a nonexistent employee via checks that can be voided later
- Using business money to pay a close family member for services that were never given
- Delaying long-term contracts until the divorce is final to intentionally lower business value
- Skimming money from the business
Finding these hidden assets can be difficult. Thankfully, litigation allows for formal discovery procedures that can reveal such evidence.
How to protect yourself
If you are suspicious of your spouse hiding assets during your divorce, you should take the necessary steps to protect yourself by organizing your personal finances. Keeping track of important documents such as your bank account statements, tax returns and pay stubs may help.
Undisclosed income and hidden assets can be extremely detrimental to you when property is divided. If you suspect your spouse is taking part in such activity, it is best to follow the counsel of a family law attorney. An attorney can refer you to other specialists such as a forensic accountant or private investigator to gather evidence of wrongdoing. Consult a family law attorney before taking part in any snooping through private information that could cause you legal trouble. With legal counsel, you can protect your marital property.