Finding Hidden Assets in a Divorce

There are many ways that assets can be hidden in an impending divorce. Following are a few to be aware of:
1. Financial statements to acquire a loan: Any loans from lending institutions require sworn financial statements to be filled out. In most cases, the borrower is trying to impress the lending institution with the extent of assets and may exaggerate these. Looking at these statements may show valuations substantially greater than what is now claimed.

2. Deferred salary increase, uncollected bonus, or commissions: It is always a good idea to check with the spouse’s employer to determine whether a salary increase is overdue, when it will be forthcoming, and how much it is. Employers are sometimes sympathetic to their divorcing employees and willing to bend the rules slightly to defer salary increases, bonuses, or commissions in order to suppress apparent income.

3. Income tax refunds: It is possible to over-withhold taxes from earned income so that there will be a refund coming that noone knows about or has thought about! This is especially effective if the divorce is final before the refund comes in the mail. Then, the recipient of the refund doesn’t feel obligated to share that information or the refund.

4. Cash transaction: One spouse may be in work where cash is paid. Such cash payments are rarely reported on the income-tax return, but if you know of such income in the past and can subpoena current information, it will help in proving available income in excess of that shown on the income-tax returns.

5. Children’s bank accounts: Frequently, a spouse who wishes to hide money will open a custodial account in the name of a child. Deposits and withdrawals are made without any intent that the child has use of the account except in case of the spouse’s death.

6. Phony income-tax returns: When the divorce has been filed, some spouses are inclined to alter the copies of their previously filed income-tax returns to hide or adjust pertinent financial information. If you have reason to believe that furnished copies have been altered, ask for copies of jointly filed returns directly from Internal Revenue Service.

7. Phony loans or debts: To keep cash from being divided, a spouse may sometimes attempt to bury the money with a phony loan to a cooperative friend or relative. The loan may be tied up with a long-term note so as to remove this money from consideration at settlement time.

8. “Friends” or other phonies on the payroll: If one spouse is in a position to control the payroll of a sole proprietorship, partnership, or closely held corporation, he or she may be paying salaries to a friend or relative who is not actually providing services commensurate with the compensation.