Uncovering Undisclosed Assets During a High Asset Divorce

Just in case divorce wasn’t difficult enough, some spouses have to worry about their ex-partners hiding assets. They generally do this because they don’t trust the court to award a fair division of assets, so they want to ensure they have what they think they deserve. This puts the other spouse in an unfair position. It’s important to know how to look for undisclosed assets, so you can give yourself the best chance at a fresh start after divorce.

Struggling with your ex-partner as you navigate divorce? Kirk Drennan Law is here to help. Schedule a consultation now by calling us at 205-803-3500.

Financial Accounts

If you believe your spouse is hiding assets, your attorney will likely request copies of all of their banking documents. In high-asset divorces, this can be complicated as those with substantial assets are likely to have their wealth spread across multiple accounts. However, nothing is totally untraceable unless your spouse conducts all of his/her transactions in cash, which almost nobody does these days.

Your attorney or a forensic accountant can go through bank statements and canceled checks to look for transfers to unknown accounts, deposits from unknown accounts, or large checks that cannot be explained. This might uncover offshore bank accounts or secret accounts that the other person is trying to hide.

Tax Documents

Tax documents are a huge source of helpful information when you suspect undisclosed assets. Even if someone is brave enough to try to hide assets in a divorce, they’re still probably not brave enough to lie to the IRS about assets that might be traceable.

From the tax report, you can look at their W2 to get information on base salary, bonuses, and benefit plans. This can be helpful if your ex-partner is trying to claim that bonuses shouldn’t be part of spousal support, since you would be able to prove that bonuses are a significant part of their income.

Your attorney may also look for tax overpayments. Some individuals will overpay on their taxes, knowing that the divorce will finalize before the refund comes back to them. This allows them to keep the overpayment without splitting it.

Other items to look for include interest deductions on Schedule A. Interest on loans may help you find hidden assets purchased with loans. Schedule B is a good place to start when looking for assets in offshore accounts. Turn to Schedule C for a breakdown of profits and losses from a business.

Lifestyle Observations

A lot can be discerned through looking at how your ex-partner lives. If you are both supposedly living on the same amount of money, yet they have funds for designer clothing, new cars, and international vacations for example, they may have money coming in from another source. While this alone is not enough to prove hidden assets, it can be a good starting point for beginning an investigation.

Business Documents

Many high-asset divorces involve business ownership to some degree, giving one spouse another way to hide assets. A forensic accountant can analyze a business owner’s cash flow to see whether or not they are trying to game the system. If the spouse has full control over the receipt, documentation, and depositing of funds rather than having a setup that allows some oversight, there could be something unethical going on below the surface.

Debt Validation

Has your spouse suddenly accrued a bunch of debt, despite not having anything to show for it? You may want to ask your attorney about it. Sometimes, an individual can rack up phony debts just to make themselves look less wealthy than they truly are. This allows them to keep more of the assets in a divorce. An individual might take out loans with a family member, friend, or a loved one’s business. They make payments on the “debt,” knowing that the payments will be returned to them as soon as the divorce is finalized.

Criminal Charges Are Possible

Criminal charges are possible—unlikely, but still possible. When someone discloses their assets and debts during a divorce, they promise to the court that the information they are providing is accurate and complete. If that turns out not to be the case, especially when there’s evidence that they have intentionally hidden assets, the court can hold them accountable.

This is a form of perjury and may lead to criminal charges. However, this isn’t a very common outcome, as the focus is ending the marriage and protecting the other party’s best interests.

Restitution and Fines Are Likely

When the court finds out that one party has hidden assets during a divorce, they can take a number of steps to make things right. First, they’ll generally require the party hiding assets to pay restitution to their ex-partner. This is often a substantial chunk of what they hid, and in some cases, they actually end up giving up more than they would have if they’d just disclosed the assets in the first place.

Second, the court can also impose fines on the fraudulent spouse as a type of sanction. The end result: the party attempting to do the wrong thing suffers financially and the person playing by the rules gets what they are owed.

Take Control of Your Divorce with Kirk Drennan Law

If your spouse is hiding assets or otherwise taking advantage of you during the divorce process, you need an attorney who is willing to stand up and fight for you. By taking control of your divorce and getting what you deserve out of the marital assets, you can set yourself up for a smooth transition to post-divorce life. Get started now by calling us at 205-803-3500 or reaching out to us online.