Some divorces go smoothly. But experienced family law attorneys will tell you it is not unusual for a divorce to get ugly. And one of the things couples fight over most often is assets. This includes cash, houses, buildings, and other assets the couple shares. And some couples fight over assets they don’t share: Sometimes, one spouse will try to hide assets from the other. Attorneys will tell you it takes work to dig up things your spouse is concealing, but it can be done. So here’s what you need to know about how to find hidden assets during a divorce.
It Is Not Unusual for Divorcing Spouses to Conceal Assets
The first thing to know is that financial “cheating” is common—very common. For example, in a recent survey by the National Endowment for Financial Education (NEFE), 42 percent of respondents admitted to cheating on their partners financially.
Part of the reason for this is that Texas is a community property state. This means that, with some exceptions, all property acquired during the marriage is owned equally by both spouses. For some spouses, the idea of having to split the assets equally with their future ex is enough to motivate them to act illegally.
Spouses also may be motivated to hide assets because they want to minimize the amount of child support or spousal support they will have to pay. Others want to hide behavior that has gone on previously—for example, gambling, drug use, or purchases for a mistress.
And some people try to hide assets for the worst possible reason: Because they think they can get away with it.
What Are the Most Common Hidden Assets?
A spouse can try to hide almost anything during a divorce. But generally, they will conceal something of value. Here are some likely hidden assets during divorce:
- Investment accounts and offshore accounts
- Real estate
- Inherited monies and trust accounts
- Credit cards
- Fine art and jewelry
Family law attorney Sean Lynch notes that dishonest spouses will tend to focus on cash and items that do not create an obvious paper trail.
“Cash makes it harder to trace the individual’s activity,” he said. “And once the money is gone, it’s gone. Judges try to split the assets 50/50, but they can only go off the numbers presented to them.”
Signs Your Spouse May Have Hidden Assets
Lynch said that, while every case is different, some warning signs may indicate your spouse is hiding assets. These include:
- Being secretive or vague about finances, accounts, etc.
- Maintaining total control over accounts and finances
- Having a private PO Box or mailbox
- Erasing computer records or programs
- Frequent stock sales
- Unusual purchases, trips, or activity
- If your spouse has a safe deposit box
Some people will try to deceive the spouse by constantly complaining about a lack of money. And others will complain about having no money while at the same time seeming to live a lavish lifestyle.
How Do Spouses Hide Assets During a Divorce?
As you might expect, there is no limit to the number of ways a spouse can conceal the couple’s wealth. Some people will do it by opening new accounts in the name of the children. If asked, the partner may make an excuse, saying it is a fund for the children’s future. Or they can transfer stock ownership to an ally, and then transfer it back later.
People also try to hide assets by doing business with family or friends. For example, your spouse may sell the family boat to his buddy at a bargain deal, with the intention of buying it back later. Or your spouse may give a gift to a family member, again with the intention of reclaiming it after the divorce.
Lynch added that deceitful people sometimes try to create ownership. For example, the house may be in their parents’ name. “Or we might have a situation where the guy’s wife’s brother bought his truck for him and the payments are going to him,” he said, “Or maybe he is storing his RV at a buddy’s place.”
How Can a Business Owner Hide Assets During a Divorce?
Family-owned businesses provide a convenient way to conceal wealth, making it harder to find hidden assets during a divorce.
“By running everything through the business, a person can greatly lower his or her personal income,” Lynch said. ”This is especially common when it comes to paying child support. If your spouse hides assets in the business, he or she may be able to significantly lower the payment amount.”
Here are three ways business owners can hide their wealth:
- Unreported income: Businesses that work in cash can easily conceal their income.
- Phony payments: The owner may “pay” friends for products and services they did not actually do, artificially reducing the owner’s wealth.
- Nonexistent staff: The owner may be “paying” employees who don’t exist, helping hide total assets. This is another way the owner can appear to be “poor.”
Also, both business owners and regular employees may have offshore accounts.
“Most clients are very upfront,” Lynch said. “They just want to be done with the divorce. The ones you have to keep an eye on are the people who are approaching the case like a battle they have to win. They often try to show themselves only in the best possible light.”
How to Reduce Your Risk of Losing Assets in a Divorce
In a difficult divorce, an experienced family law attorney can be your best ally. However, even the best attorneys need help. One of the best things you can do to help your attorney find hidden assets during a divorce is to become knowledgeable about your finances.
“It’s not unusual for one spouse to handle most of the finances,” Lynch said. “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, it makes my job much harder. Initially, have to go off what the other party says.”
Lynch believes being financially informed is good advice for everyone, not just divorcing couples.
“Even if divorce is the furthest thing from your mind, it’s wise to be knowledgeable about your financial affairs,” he said.
How to Find Hidden Assets in a Divorce
So what should you do if you suspect your spouse is holding back on you? Lynch said to find hidden assets, you must take action—and the sooner, the better.
“If you’re suspicious, the first thing is to get more involved in the day-to-day family finances,” he said.
You also will want to start collecting documents as soon as possible. That includes bank account statements, credit card statements, loan paperwork, retirement account records, and other information about your assets.
One of the best things you can do is get your own copy of your tax returns. And you should keep a discrete eye on your spouse’s credit reports and spending habits, particularly for expensive items. In extreme cases, you may even need to hire a private investigator.
“If you suspect your spouse is hiding assets from you, act quickly,” Lynch said.
Last, don’t sign any important documents that you do not fully understand.
If You Think Your Spouse is Hiding Assets, Talk with an Attorney
Of course, if you’re worried about the honesty of your spouse, you probably also are worried about the stability of your marriage. If you are considering divorce, Lynch recommends you speak with an experienced divorce attorney as quickly as possible. And as difficult as it may be, you need to tell the lawyer that you may need help finding hidden assets.
The attorney will be able to provide good legal advice. In some situations, the attorney may even hire a forensic accountant to help track down hidden assets.
“If your spouse is hiding stuff, there usually is going to be a paper trail,” Lynch said. “For example, all of sudden, it looks like his direct deposit paycheck is a little smaller. Or maybe they took out a second mortgage on the house.”
Sean Lynch is a Metroplex Attorney Who is Experienced in Discovering Hidden Assets During Divorce Cases
Are you concerned that your ex might have a hidden bank account or other assets? Talk with the award-winning family law attorney Sean Lynch + Associates, PLLC. He can help you prepare your case and track down the assets that you rightfully deserve a share of.
For a no-cost case review, contact him today or call 817-668-5879.