While dividing assets during a divorce aims to reach a fair settlement, some spouses may attempt to hide assets to avoid sharing them during the divorce. This behavior can complicate the proceedings and lead to an unfair distribution of property.
Hiding assets during a divorce is not only unethical, but also illegal. However, that doesn’t always deter those determined to keep more than their fair share. Understanding common methods to conceal assets can help you and your attorney identify potential red flags. This knowledge can empower you to take appropriate action and ensure that all marital property is accurately accounted for during the divorce.
1. Transferring Assets to Friends or Family
One of the most common ways a spouse might try to hide assets is by transferring them to friends or family members. This method involves temporarily "gifting" or "loaning" money, property, or other valuable items to someone they trust. The idea is that once the divorce is finalized, the assets can be quietly returned to the spouse. This can include anything from real estate and vehicles to cash and investments.
Identifying this tactic can be challenging, especially if the transfer is made well before divorce proceedings begin. However, sudden or unusual transfers of large sums of money or valuable assets should raise suspicion. Reviewing bank statements, deeds, and other financial records can help uncover these transactions. If you suspect your spouse is using this tactic, bring it to your attorney’s attention for further investigation.
2. Underreporting Income
Another way a spouse might hide assets is by underreporting their income. This is particularly common among business owners, freelancers, or those who receive cash payments for their work. By not reporting all their earnings, they can make it appear like they have less income than they do, reducing their financial obligations in the divorce settlement.
Closely examine your spouse’s financial records, including tax returns, bank statements, and business financials. Discrepancies between reported income and lifestyle, such as expensive purchases or vacations, can also indicate that income is being hidden. Hiring a forensic accountant can be valuable in uncovering hidden income and ensuring that all earnings are properly disclosed.
3. Overpaying Creditors
Some spouses use overpaying creditors as a sneaky tactic to hide assets during a divorce. This involves deliberately paying more than what is owed on credit card bills, mortgages, or other debts. After the divorce is finalized, the spouse can request a refund or credit for the overpaid amount, effectively reclaiming the hidden assets without raising suspicion during the proceedings.
Identifying overpayments requires thoroughly reviewing all financial transactions, particularly debt payments. Any large or repeated overpayments should be questioned, and your attorney may need to request documentation from creditors to determine if this tactic is being used.
4. Creating Fake Debt
Creating fake debt involves your spouse claiming to owe money to someone, often a friend or family member, to reduce the amount of marital property subject to division. They may produce fabricated loan agreements or IOUs to support their claims, making it seem like they have significant financial obligations that must be repaid.
Exposing fake debt requires careful examination of any claims made by your spouse regarding outstanding loans or debts. Requesting documentation and verifying the legitimacy of these claims through third-party sources can help reveal whether the debt is real or just a ploy to hide assets. If you suspect fake debt is being used, your attorney can take legal steps to challenge these claims in court.
5. Undervaluing Assets
Finally, undervaluing assets is a common tactic used to hide their true worth during a divorce. This can involve anything from underestimating the value of real estate, vehicles, and businesses to downplaying the worth of personal property such as jewelry, artwork, or collectibles. By providing lower valuations, your spouse may attempt to minimize their share of the marital property and keep more for themselves.
Accurately valuing assets is essential to ensuring a fair division during a divorce. Obtaining independent appraisals for high-value items, hiring experts to assess business assets, and reviewing recent sales of similar properties can help counter this tactic. Working closely with professionals can ensure that all assets are properly valued and that you receive your fair share in the divorce settlement.
Contact Us for Legal Assistance
Hiding assets is a behavior that occurs in many contentious divorces, but it can happen to anyone. While you shouldn’t make yourself sleepless with suspicion, it’s important to question if your spouse might do something like this. If you can imagine it as a possibility, it’s worth taking the appropriate measures to look for assets that may be hidden.
Throughout this process, Kay Polk, Attorney at Law can provide the legal support you need. From helping you take the necessary steps to connecting you with professionals such as forensic accountants, we can guide you toward discovering anything your spouse might be hiding.
For more information, contact us today and request an initial consultation.
