Common Ways to Hide Assets in Divorce

Have you ever wondered if the opposing party in a divorce case has actually disclosed all the assets of an estate?  Do you feel like your spouse might hide assets in divorce?  

Common Ways to Hide Assets in Divorce

This article covers creative ways people have hidden assets in divorce and conversely, ways we have found those assets.  We feel like the best way to talk through a divorce is with integrity and dignity without lying about assets.  Often, doing so could backfire on you.  However, if you feel your spouse is lying about money, here are a few places to look.

Excess ATM Cash Withdrawals

Excess cash withdrawals from ATM’s are fairly common.  One spouse will start taking small withdrawals on a regular basis from ATM machines.  Instead of using the cash for legitimate purposes, they stockpile it and forget to mention this as an asset when walking through the estate valuation.  They claim they have spent all the money and have no cash on hand when in reality they have a lot of cash on hand.   We often are able to track exactly how much cash was spent, on average, in normal conditions and then compare that to the months leading up to the divorce and in the divorce months.

Stealing Hard Assets

Some people will literally “hide” assets.   For example, imagine if a couple has a lot of jewelry that’s been accumulated over the years from various sources. Prior to inventorying, one party takes a few select items from the jewelry box and hopes the other party doesn’t notice anything is missing.

This can also be in the form of hiding items in safety deposit boxes whether they be straight issue bonds in coupon form, stocks in issue form.

Another form of stealing cash is having cosmetic surgery or taking an expensive lavish trip soon before requesting the divorce.

Overpaying Debt Instruments & the IRS

One way to having a cushy safety net is by overpaying the IRS.  An unethical spouse can change their W2 withholdings if you are employed by a firm.  Doing this creates an account you know will be refunded when you do your taxes the next year and it lowers your spendable income today for purposes of child support and negotiation.   If you are self-employed your ability to overpay the IRS can be in the form of quarterly payments from company distributions or again, increasing your W2 withholdings if you pay yourself.

If a credit card is overpaid and the credit balance sits for a while, the credit card company will refund the overpayment, usually in the form of a check. The party that overpaid the credit card can then take that check and cash it. To the other party, particularly those who aren’t close to the household finances, it just looks like credit card debt was paid.

Self-Employed Financial Games

Self-employed parties have many ways to attempt to hide income and assets in their business. Income can be hidden by increasing expenses or by paying a large expense that must be done but wasn’t budgeting for a few more years. For example, buying a huge piece of equipment you had originally planned to buy in a few years will lower your income which could lower the value of your business.

Self-employed people can overpay taxes with increases to their W2’s or increase their quarterly payments to the IRS.  Self-employed people can also delay being paid and sit on a large amount of account receivable until after the divorce.

In Texas and many other states, personal goodwill is not a community asset. Games can be played here to try to increase personal interest and personal involvement in business as to decrease the value of the business in the community estate.

If you are considering divorce, it’s important that you have the right professionals involved. A Master Analyst in Financial Forensics ® (MAFF®) and a Certified Divorce Financial Analyst® (CDFA®) has the training to help uncover shady acts like the ones listed above. And here at Divorce Strategies Group, we have both the hearts and minds to help make sure your financial outcomes in divorce leave you feeling confident. It’s all about having the right people on your team. If you are concerned your partner will hide assets in divorce or need some professional divorce help contact us today.