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Divorce Resources for Women

Finding Hidden Assets During Divorce

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Discovering that your spouse has been hiding assets from you can leave a bad taste in your mouth. It can make you angry, upset, and confused. You’re already going through a divorce, a process that is difficult enough in itself, and now this is one massively rotten cherry on top.

The reality is we live hectic lives. Our days seem to fly by and the world around us moves quickly. Unfortunately for that reason, it is often easy for a spouse to hide assets from the other without much effort or difficulty. Not only is it easy, it is common.

You have suspicions. You know that something is off and begin connecting the dots. You haven’t confirmed your suspicions, but you are fairly certain that they are true and you are not sure what you should do next or what your options may be at this time.

What do I do if I suspect that my spouse is hiding assets?

The truth is there is not a standard answer to this question. Your options may depend on your individual situation. For example, if you believe that your husband is hiding assets from you or charging undisclosed expenses to your joint bank account, you can take care of your suspicions very easily by simply requesting bank statements from your local branch. However, this process becomes more complicated if your spouse is hiding assets in independent accounts, accounts to which you do not have access, or if you are unsure what type of assets he is hiding and where or how.

The most common ways to discover if your spouse is hiding assets from you is through the following:

Hidden Documents

Even though our society is quickly turning into a paperless society, there are certain documents that your spouse may receive from banks, mortgage companies, or the IRS. If you know that your spouse tends to keep these types of documents in secret or safe spots, you may be able to confirm your suspicions by searching there. You may find bank statements, stock certificates, or title to property. Typically, it is easy to store documents away and hide them from the other spouse because when we have no reason to go looking for things, we do not. This may be one of the easiest and most effective ways to discover hidden assets.

One word of caution – if you do choose to try to find any hidden documents, make sure you are only looking in areas that you have access to. Looking through drawers or even a safe in your own home is one thing, but hacking into your spouse’s email or online accounts can create huge problems. Remember that just because you are married does not mean you have access to your spouse’s electronic accounts.

Bank Accounts and Credit Reports

Admit it, not many of us tend to check our bank statements or credit reports on a day-to-day basis. In fact, we often only check them when making a large purchase. This is why one of the easiest ways for a spouse to hide assets is through a bank account.

Your spouse may open a new bank account under their name. One to which you do not have access and of which you may not be aware. During or before the divorce process, your spouse may make small transfers from a marital account to the new account. These small transfers are likely to go unnoticed from day-to-day, but they will certainly add up. This is why it is so important that you keep a close eye on your bank statements during the divorce process.

Not only may your spouse make these types of transfers to their own bank account, they may transfer money to a family member to make it even harder to raise suspicions. If you have children, they may open a bank account in your child’s name and begin transferring funds to that account.

The quickest and most effective way to prevent your spouse from hiding assets through other accounts, is to carefully monitor the activity through your bank statements.

You will also want to keep a close eye on your credit report. Most people only worry about their credit report when buying a house, a car, or making a big purchase, but your credit report is very detailed and can often give you clues as to new bank accounts, property assets, and loans that your spouse may have acquired. There are several free and safe websites where you can take a look at your credit report to monitor these changes.

Monitor Spending

Your spouse may take it a step further and purchase assets to disguise them as hidden assets. For example, your spouse may purchase a new vehicle, new watch, paintings, or furniture during the process. They may tell you that these are things that they need, but be careful. They may simply be purchasing these items to get an advantage post-divorce. In other words, they may be purchasing these items to sell them and receive money after the divorce. Therefore, it is important that you keep an eye on any new purchases and keep a record of their cost, if possible.

Professional Help

While there are times when it is easy to discover hidden assets simply by looking through bank

statements, spending habits, or documents around the house, it is important to seek professional help to help you confirm these suspicions. The first thing that you should do if you suspect that your spouse is hiding assets is contact your attorney. The divorce process is often lengthy and complicated. However, it can become more complicated and confusing if your spouse is in fact hiding assets. Because they have likely gone to extreme measures to keep these assets under the radar or have been very careful and discrete, a specialized professional may be necessary to help you get to the bottom of it. They may have even resorted to transferring the money to off-shore accounts.

Your attorney will work very closely with other professional in order to make sure that all assets come to light during the equitable distribution phase. One of your attorney’s main priorities during this phase is that you receive a fair and equal share of the marital property after divorce. Hidden assets can complicate this situation because your spouse may have cleared bank accounts, closed accounts, obtained new loans, or sold property and spent the assets. It can often be hard to trace assets down to every single penny, but your attorney, along with other professionals, can assist in ensuring that every possible penny is recovered before you agree to an equitable distribution agreement.

What happens next?

The first thing that your attorney may suggest is serving the opposing party, your spouse, with discovery.

In the discovery your attorney can request and require your spouse to disclose any and all assets. This is the first step that is often taken because it allows your spouse to come clean about any assets which they have hidden. If they also have an attorney, their attorney will review the discovery requests very closely and likely have a talk with them. They will probably advise them to disclose any hidden assets and advise them that there are consequences if they fail to disclose assets.

After discovery is served, your spouse will have a specific number of days dictated by the local rules, to respond to the requests. If they fail to do so, your attorney can move to file for further sanctions.

If Discovery Doesn’t Work, Then What Other Options Are There?

Forensic Accountant

Hire a forensic accountant to assist in the process. Forensic accountants are specialized accountants in the areas of fraud. Their occupation requires them to do extensive investigative work in determining whether there has been a fraud or concealment. These individuals go above and beyond what your regular accountant or CPA does. You may have a personal CPA that you consult on different matters, including filing taxes, but it is very important to remember that you need a specialist. This is where the forensic accountant comes in. They take financial data, and break it down. They use their auditing, accounting, and investigative skills to determine whether or not there are missing assets.

Forensic accountants may also choose to conduct a lifestyle analysis. They can take a look at the couple’s spending habits, expenses, incomes, and assets to determine whether or not everything can be traced back to the couple. This process allows the accountant to determine where the missing funds or assets went. It can also help to determine if any of the assets were changed in form. For example, if your spouse transferred money to a separate account or purchased stocks with marital funds.

Private Investigator

A personal investigator should also be hired. When we think of a personal investigator we typically think of someone following people around and spying on them. However, personal investigators are very savvy individuals who can often help your attorney discover any assets that your spouse has kept from you.

Through their skills they can find loans, off-shore bank accounts, contact individuals who may have more information, and determine if your spouse bought any property without your knowledge either for himself or for someone else.

IRS Document Requests

In the process you may discover that your spouse has transferred assets to off-shore accounts. The next step is to request a form from the IRS. Specifically, IRS Service Form 3520, Annual Return to Report transactions with foreign trusts and receipt of certain foreign gifts; IRS Service Form 3520A, Annual Return of Foreign Trust with a US owner. This form will allow you to receive more information about the assets that have been transferred to accounts in other countries or jurisdictions.

What if hidden assets are discovered after settlement?

Contact your attorney as soon as you discover hidden assets. When a spouse gets away with hiding assets until after the documents are finalized, it can be more difficult to trace them back to the marriage.

More difficult, but not impossible. Before signing any agreements your attorney may include a clause that penalizes a spouse who hid marital assets, whether that is discovered before or after the process is complete. Your attorney will meet with you to discuss your suspicions and make a plan for the steps that will be taken to recover those assets. This may require you to file other claims against your former spouse.


 

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