If you are in the middle of a divorce, you might suspect your spouse of trying to hide assets to avoid sharing them with you. Property division in Texas follows the community property principle. This means that marital property must be shared equally in a divorce.
A recent survey by the National Endowment for Financial Education (NEFE) found that 42% of American couples admitted to cheating on their partners financially. The same institution found that 40% of American couples who manage their finances jointly admit to keeping money secrets from their spouses.
While an experienced family law attorney may be good at finding hidden assets and has legal discovery tools available to them, it can still be challenging to find hidden assets in divorce if you’re not knowledgeable about your finances.
“In a lot of marriages, it’s not unusual for one spouse to handle most of the finances,” Sabelhaus+Lynch attorney Stephanie Sabelhaus says. “And we understand that.”
“But if you are getting divorced, being financially uninformed is a real handicap. If the other party is hiding something and you are not aware of it, there’s just not much we can do. We have to go primarily off what the other party says, which may or may not be true.”
Your lawyer also has to submit more requests and commit more time towards finding hidden assets, which can mean higher attorney expenses.
“Even if divorce is the furthest thing from your mind, it’s wise to be knowledgeable about your financial affairs. While it is typically the wife who is less financially informed, husbands have been known to make this same mistake,” Sabelhaus says.
Why Do Divorcing Spouses Hide Assets?
Ex-spouses may attempt to hide assets from one another during a divorce for several reasons, including the following:
- They think the law might not share their assets in a manner they would be satisfied with
- The possibility of surrendering or paying more than what they feel their former spouse deserves
- They want to conceal certain behavior or conduct from their ex-spouse
- They want to avoid paying child support or spousal support
- The divorce is a high-asset case
- One spouse was solely in charge of the property or assets
What Are The Most Common Hidden Assets?
Divorce or separation can turn ugly fast, and some former spouses may attempt to conceal assets. Some individuals may also sell any assets that can be easily converted to cash, such as bonds and stock shares
Other assets that might be hidden include:
- Investment accounts
- Real estate
- Inherited monies
- Trust accounts
- Offshore accounts
- Credit cards
- Fine art
Signs Your Spouse is Hiding Assets
While you might not expect your partner to prevent you from getting what is legally yours, it’s not uncommon. There are many behaviors people engage in when they are concealing assets.
Here are some signs your spouse might be hiding assets:
Being secretive about money
Your spouse might generally be secretive about money and give vague answers when you ask questions about your finances as a couple. They might keep away tax returns and bank statements, and generally handle bank matters by themselves.
Maintaining total control
Your ex may maintain total control of shared resources and assets, including bank account details and passwords. It is your right to know as much about your family’s financial status as your partner does. You should have access to any joint bank account.
Deleting computer records or programs
Another way that a person may hide assets is by erasing financial records or computer programs like QuickBooks or Pastel. He or she may also claim that a computer has crashed when they have actually destroyed or stolen the hard drive. In some cases, they may regularly hide or dispose of paper statements.
Having a private mailbox
Your ex may own a private mailbox or separate PO Box to receive important financial information secretly. In this case, some spouses may consider using a private investigator to monitor the other person’s activities.
Complaining about money
Your ex may keep complaining about the bad state of their finances, like a major debt, mysterious loss of business, or unsuccessful investments. This may be an attempt to get you to think they don’t have as many assets. Overstating, exaggerating, or lying about one’s financial struggles can also end up skewing the property settlement in the other party’s favor.
Income and lifestyle discrepancies
If your ex lies about his/her earnings but is visibly living a lavish lifestyle, chances are he/she is concealing assets. For instance, if he or she takes expensive vacations or makes ridiculously extravagant purchases, chances are that he or he is lying about his or her financial situation.
Sudden or mysterious account activities
If a shared bank account has previously had a consistent withdrawal rate, but you notice sudden or strange withdrawals and purchases, then something may be amiss. Keep an eye on the transactions passing through any joint bank account.
Asking for your signature
Someone who is trying to hide assets before divorce may keep demanding your signature on various financial documents. To be on the safe side, read financial documents carefully before signing it, or take it to your attorney for professional advice.
Gifting to loved ones and friends
Although giving gifts or large assets to family members or friends may seem like a generous act, it is a huge red flag. A spouse could reclaim the assets after the divorce is finalized.
Opening a new account
If you notice that your spouse is depositing money into a separate bank account from the bank statements, there is a chance that they may be hiding money. For example, your spouse may open another bank account with your child’s name to hide money. When asked, he or she may say they are saving for your child’s future milestones.
Frequent trips or financial activity overseas
If your ex has an offshore bank account or makes regular trips overseas without a good reason, you might need to investigate. Your lawyer may need to send an order to the overseas bank that you think your ex has an account in to get all records in his or her name.
Questionable business and/or tax practices
You might notice that your ex has started giving a salary to an employee you’re unfamiliar with. You might find that your ex exaggerates business expenses on his/her tax returns.
If your spouse has a business, it’s easier for them to hide money. “By running everything through the business, a person can greatly lower his or her personal income,” Sabelhaus says. “This is especially common when it comes to paying child support. The court uses a formula based on the individual’s wealth to determine how much he or she will have to pay each month. If your spouse hides assets in the business, he or she may be able to significantly lower the payment amount.”
If you notice any of these signs, you might need to take further steps to track your finances as a couple and investigate if your spouse is attempting to hide their income or money. In some cases, you might need to hire a private investigator.
Consequences of Hiding Assets During Divorce Proceedings
Not only can hiding assets lead to criminal penalties for the spouse involved, but the court may also transfer all of the discovered marital assets to the other spouse.
During divorce proceedings, both spouses are typically required to fill out a financial declaration form. This reveals all assets owned by both parties. Once you sign this form, you’re swearing under oath that what you have declared is correct to the best of your knowledge.
If one spouse doesn’t disclose his or her finances during a divorce, there are usually serious consequences. Once it is found that a spouse is trying to hide income or assets, the judge has several options for penalties to impose. These include:
- Awarding a smaller share of the assets
- Paying the legal fees of the other party
- Criminal charges for perjury or contempt of court, which could lead to time behind bars.
What Should I Do If I Suspect My Spouse Is Hiding Assets?
Undervaluing marital assets, under-reporting income, or overstating expenses are more common than you might imagine.
Here’s what you can do to find hidden bank accounts and assets during a divorce.
How to Find Hidden Bank Accounts and Assets During a Divorce
Understanding the resources and methods used by professionals such as a forensic accountant, private investigator and a divorce attorney can help you avoid getting duped by your spouse or former spouse who is concealing marital property.
Here are a few common ways to find out if your spouse or ex-spouse is hiding assets from you.
Although the world is quickly going paperless, many paper documents are issued by the IRS, banks, and mortgage companies. Be mindful about the mail that comes in and find out where your spouse keeps those documents. Have your own copy of tax returns and any addendums.
You could find property titles, credit card statements, and bank statements that your spouse keeps in a certain location. It’s generally fine to look for documents in your own house or safe deposit box. However, hacking into another person’s online account or email account could be an illegal means of gathering evidence.
Credit Reports and Bank Accounts
One way for your ex-spouse to keep hidden assets is to open a secret bank account or credit card. Before the divorce process, he or she may transfer funds to the hidden bank accounts. If any small transfers go unrecognized for a long time, they can definitely add up. That’s why it’s strongly recommended to keep an eye on credit reports, tax returns, and bank statements before and during a divorce.
In addition to making these kinds of transfers to hidden bank accounts, a spouse may also transfer money to a friend or relative. Your spouse may also open new bank accounts in your children’s names and start transferring money to those accounts.
Therefore, one of the best ways to protect yourself and prevent your partner from hiding assets through hidden bank accounts is to keep a close eye on bank statements. If you believe that your spouse is trying to conceal the existence of a hidden bank account, consider working with a forensic accountant or private investigator.
You should also monitor credit reports. They can offer some important clues as to properties or bank accounts that your spouse may be hiding from you. The only thing that credit reports will not show is debit card accounts.
Monitor Spending Habits
Your spouse may also be buying assets. For instance, your spouse may buy a new car, furniture, or other high-value items like jewelry.
Chances are that they may be buying such things to sell them and make money post-divorce. That is why it’s recommended to keep a close eye on any large purchases. It may be a way for your ex to retain hidden assets.
Seek Professional Help
Dividing assets during a divorce can create issues that have a long-lasting impact on your life. If you are going through a divorce, you need an experienced divorce lawyer on your side to ensure you receive the full amount of assets you are entitled to – and discover hidden assets.
Experts recommend you talk to an attorney if you or your former spouse:
- Runs a business
- Own significant assets
- Have retirement accounts
An experienced attorney can conduct an asset search investigation to determine if a spouse has any assets that he/she is not accounting for. A qualified attorney can also handle the legal process to help find hidden bank accounts and get more information about the hidden assets.
For instance, an attorney can provide help and support in the following ways:
- Request the testimony of a witness under oath
- Request the court to order an asset search
- Demand bank statements, loan applications, tax returns, and other documents
- Request that a spouse answer written questions or “interrogatories”
- Make search demands, including demanding an asset search investigation in certain properties and electronic records.
You may also want to hire forensic accountants and private investigators to help you discover potential fraud and illegal concealment of marital assets.
Timing is Everything
If you’re contemplating filing for a divorce or are already going through one, it is important to take stock of all marital assets as soon as possible. It’s not uncommon for spouses to hide assets when the divorce process begins.
If you suspect that your spouse has been concealing marital property and tax returns, discuss it with your divorce attorney. This is particularly important if one spouse has been the main breadwinner or has been solely responsible for evaluating bank statements and paying bills during the marriage.
Your divorce lawyer will find the best way to gain a good understanding of your shared assets and resources. That could involve requesting your ex to provide documents and subpoenaing banks and other institutions to provide the necessary information about your marital assets.
If you’re considering filing for divorce, it’s best to start collecting documents as soon as possible. That includes business account records, bank statements, loan paperwork, retirement account records, and other forms of information about your marital assets. This sort of information will come in handy when your divorce attorney starts to work on your case.
In some cases, you might be convinced that there are hidden assets somewhere but it may not be worth the cost. Sabelhaus has experienced this a few times with clients.
“A client might say, ‘I know he has an extra $1,000 or $3,000 hidden somewhere’,” she said. “And I understand how that can be a lot of money for some people. But you have to weigh it against the added legal expense of trying to find that money—and the stress of dragging out the divorce. Instead of focusing on victory at any cost, it makes more sense to focus on being as financially informed as you can now.”
Schedule Your No-Cost Legal Consultation
Are you seeing signs that your ex might have a hidden bank account or assets somewhere? Not sure about the options available to you to find hidden funds when your marriage is ending?
Let the award-winning Family Law experts at Sabelhaus and Lynch law firm help you prepare your legal case. We have years of experience in family law and most importantly are ready to listen to you.
Contact us today for a no-cost case review.