Issues related to property and finances can become complicated when a marriage ends. In cases involving high levels of conflict or distrust between spouses, one spouse may attempt to hide money or valuables in order to keep them for themselves without dividing them during the divorce process. While such actions can potentially create additional conflict and complicate the legal process, not every situation may involve asset concealment. For those who are concerned that their spouse might try to hide assets and unfairly influence the property division process, it can be helpful to understand the methods that may be used and how these issues could be addressed during a case.
Why Some Spouses May Attempt to Hide Assets
There are many possible reasons for a spouse’s attempts to conceal money or property. Some people may fear that they will lose what they believe is their rightful share of marital wealth. Others may be driven by resentment, a wish to maintain a certain lifestyle after separation, or a belief that the other spouse should not benefit from assets acquired during the marriage. In certain situations, a person may believe that a lack of transparency could give them a financial advantage. However, regardless of the reasons, attempting to hide assets can have consequences that might affect divorce proceedings.
Common Methods Used to Hide Assets
Attempts to conceal property can take numerous forms. Some may be simple, while others may involve complex financial tactics. They might include:
Physically Hiding Cash or Valuables
Some people may take a direct approach by removing cash from joint accounts and placing it in secret locations. They might keep money in a private lockbox, store jewelry or collectible items in a hidden place in their home, or use someone else’s home, a private safe deposit box, a business, or another location as a storage site. When cash or other items cannot be easily found, it can sometimes be difficult to identify what was hidden and determine its value.
Purchasing High-Value Items
Another method involves converting cash into tangible goods. High-value purchases may include artwork, rare collectibles, luxury goods, or even vehicles. These items could be intentionally undervalued or overlooked when property is discussed during a couple’s divorce. The goal is often to convert cash into something that might appear less valuable or may be easier to conceal.
Transferring Money to Friends or Family
Some people might attempt to conceal assets by moving funds into accounts controlled by relatives or close acquaintances. These transfers may be described as temporary loans, gifts, or payments. A person may claim that these transfers are for legitimate reasons, such as paying back a debt, but they may plan for the money to be returned after the divorce is finalized.
Concealing Funds in Overseas Accounts
International accounts can be used to keep money in locations where it might be inaccessible to the other spouse. Funds may be transferred to foreign banks where account information is more difficult to access. Although cross-border financial transparency has increased in many places, some people still attempt to use overseas institutions in hopes of avoiding scrutiny.
Using Business Structures to Hide Money
A person who owns or manages a business may have additional opportunities to conceal assets. Methods can include altering bookkeeping records, delaying invoices, inflating expenses, or creating fictitious debts. In some cases, a business owner might pay wages to a fictitious employee while actually funneling money into a secret account. These tactics may serve as a method of decreasing the apparent value of a business or the income a business owner earns. Because business finances can be complex, identifying irregularities might require a careful review by a forensic accountant.
The Impact of Hidden Assets and Asset Dissipation
Hidden assets can be a significant concern during a divorce, since they might make it difficult to divide marital property fairly and equitably. In some cases, a spouse’s actions may be considered asset dissipation, which involves actions that reduce the value of the marital estate. If a spouse engages in excessive personal spending, sells property for less than its value, or intentionally reduces the balances of joint financial accounts, these actions could need to be addressed to help ensure that the other spouse will not suffer financial harm.
How Hidden Assets May Be Addressed During the Divorce Process
Although each situation is different, there are some common steps that may be used to bring financial information to light, provide transparency, and evaluate the full scope of a couple’s marital property. The methods that could be used to uncover hidden assets and divide marital property during a divorce include:
Financial Disclosures
During the discovery phase of a divorce, both spouses will be required to list income, assets, liabilities, and expenses. When the documents provided by one party are inconsistent or incomplete, questions may be raised about whether certain assets have been hidden. Disclosure obligations can help create accountability by requiring each party to provide accurate information.
Review of Financial Records
Bank statements, tax returns, business documents, and transaction histories may be examined to identify unusual activity. Unexplained withdrawals or transfers or other discrepancies may signal that a further review is necessary. A careful examination of financial records can reveal patterns that could point to concealed property.
Valuation Methods
When a divorce involves high-value items or business interests, valuation methods may be used to determine what these assets are worth. This can help create a complete picture of the marital estate. Accurate valuations could help to reduce the likelihood that either spouse will benefit from hiding or misrepresenting the value of assets.
Addressing Misconduct During Property Division
If hidden assets or dissipation are discovered, these issues might be taken into account when dividing property. In general, the goal will be to reach an outcome that would provide each spouse with a fair and equitable share of the full value of the marital estate, including property that one spouse attempted to conceal. In some situations, a spouse who engaged in concealment or who dissipated assets may receive a reduced share of certain assets, or they could be required to reimburse the marital estate for the amounts that were hidden or dissipated.
Ensuring Fairness in the Division of Property
Issues related to hidden assets can involve complex financial questions and increased conflict between divorcing spouses. To help ensure that these matters will be handled correctly, a person might work with a divorce attorney who understands how to identify hidden assets and who can advocate for fair solutions. An attorney may also work with forensic accountants or other professionals to address financial issues, uncover misconduct, and determine how to protect a person’s interests.
Disclaimer: The information provided in this article is for general informational purposes only and is not intended as legal advice. Every divorce case is unique, and the methods or strategies discussed may not apply to all situations. For advice specific to your circumstances, it is recommended to consult with a qualified attorney who specializes in family law.