When you and your spouse decided to divorce, you might have assumed you would both treat the process with honesty and transparency. Your spouse, though, maybe playing hardball and is trying to win your divorce by all possible means. You may suspect that they are hiding assets, which – if they managed your household’s finances – they think you will have difficulty finding. By knowing how to locate these, you can make sure you receive the share of marital property you are entitled to.
How spouses hide assets
Before divorce proceedings begin, you will go through a period known as discovery. During discovery, your attorney can demand that your spouse provide a written statement or an oral deposition – under oath – to answer any questions you have about their finances. They can also demand your spouse to produce certain documents, like financial records. With your attorney’s help, you can review these documents, which may include tax-returns and bank statements, for discrepancies. If you find any red flags – like offshore income, real estate income, or investment income previously unknown to you – they may signal that your spouse is hiding assets.
Outside of discovery, you will want to know where to look for hidden assets on your own. Some ways that your spouse may be hiding assets – in plain sight – include:
- Delaying income, a bonus, or a promotion
- Gifting items or money to family and friends
- Investing in cryptocurrency
- Opening a P.O. box
- Purchasing expensive items – like collectible cars or art – to convert to cash later
- Taking frequent trips to known tax havens
A Forensic Accountant May Help
Once the parties make all the required court disclosures to divorce (including monthly expenses for housing, expenses, food, clothing, utilities, insurance, medical bills, taxes, household maintenance, education, transportation, and recreational activities, income, assets, liabilities, debts, etc.), the accountant will commonly investigate financial records and conduct an audit if necessary. They may investigate both spouses’ assets, review bank account and credit card statements, and investigate whether there are recent significant write-offs.
They also will search public records such as property deeds. Often, to avoid disclosure, a spouse may transfer property to a family member or friend and reclaim the property after the divorce. A spouse may also have court judgments against outside parties, which will eventually provide them with more income they did not disclose.
When one spouse owns a business, the forensic accountant will search with the Secretary of State’s Office, which typically retains financial statements for five years.
Certain assets, among them stock options and artwork, may have unknown value, and a forensic accountant may help you place an accurate price tag on them so you can divide them accordingly. This type of help may also benefit you if you or your spouse have assets or business interests in other states or nations.
Consequences for hiding assets
Washington is a community property state, which means that – as part of your divorce – you and your spouse will receive equal shares of any assets you acquired during your marriage. The court, then, will likely frown on your spouse’s actions if they have hidden these from you. If they lied under oath about the existence of these assets, they could face perjury charges. Regardless, they could face financial penalties, determined at the court’s discretion. Your spouse may have to pay a fine, as well as your attorney’s fees. And they may have to repay your share of the hidden assets to you.
By knowing how to track down hidden assets, you can make sure you receive your proper share of your marital property. An attorney can help you work through the process of discovering these assets and holding your spouse accountable.
Chad Foster is a trusted Washington lawyer serving Snohomish and King counties with an office in Bothell. Contact us today to discuss your legal issue.