Welcome to the twenty-first episode of Divorce and Your Money Podcast. Your host, Shawn Leamon, MBA and a Certified Divorce Financial Analyst, discusses how to find out if your spouse is hiding assets or money during divorce.
Hiding assets during a divorce is a crime, and here are some common tricks a spouse might use.
The most common way is a spouse reporting lower income and higher expenses. They can easily do this by deferring their salary, bonuses, or commissions. They can also manipulate their expenses by reporting high expenses leading up to the divorce. Another method for hiding assets is by creating fake or inflated debt. Such debt will be deducted from the amount of the settlement. Assets can also be hidden by transferring them to friends, which can then be recovered after the divorce is finalized.
A trickier way of hiding assets is when a spouse withdraws a lot of money and puts it into a safe deposit box. This money can be difficult to find, as safe deposit boxes are difficult to access. Another way is by overpaying taxes to the IRS, which can be refunded after the divorce. A less-common method is through cash withdrawals from credit cards and debit cards.
The more important issue is what to do when you think your spouse is hiding assets from you. You need considerable financial help in this regard, but you should first look at your credit report. Look at what accounts are opening or closing. Look for anything that seems improper. These reports are easy to read, and you can spot red flags if you pay attention. You can also closely look at the financial affidavits to notice if anything is amiss.
You can also seek help from two types of professionals. You can hire a Forensic Accountant, who will go through every transaction and document to make sure they are accurate. Such people will find out if there is anything shady in the documents. Another professional you might want to consult is a Certified Divorce Analyst, such as your host, Shawn Leamon. These experts will prepare a lifestyle analysis for you by looking through your credit cards, bank accounts, and assets. They will provide you with a detailed overview of your spending pattern as well as that of your spouse. Any irregularity in these patterns will identify hidden or missing assets.
Each state has a different penalty if a spouse is hiding assets, which is why you need to be aware of the possibility that this may happen.
Key Learning Points
- Hiding assets during a divorce is a crime.
- A common way of hiding assets is by reporting lower income and higher expenses.
- Assets can be hidden by creating fake or inflated debt.
- Assets can be hidden by transferring them to a friend.
- Assets can be hidden by withdrawing a lot of money and putting it into a safe deposit box.
- Assets can be hidden by overpaying taxes to IRS.
- To find out of your spouse is hiding assets, thoroughly check credit reports and financial affidavits.
- Seek help from a Forensic Accountant or a Certified Divorce Analyst.