A question I hear often is, “How do I know they have disclosed all the assets?”
If the opposing party is a wage earner, we can usually trace their income from their paycheck to an account. If they are self-employed, it can be much more difficult.
These are some of the ways I have seen:
- Giving money to a family member, by setting up an account with them or asking them to keep money, or even transferring or saying you “sold” them something. Unless you are in the habit of giving your family members money then suddenly sending them thousands of dollars is going to trigger a question. Just a few weeks ago, my client saw transfers of $5,000 each to her husband’s sister. I have had people sell their trucks to their nephews or given to their brothers. Unless your spouse doesn’t know what vehicles you own, they are going to want to know what happened to these things. One asset that seems to get up and walk off on their own is tools. If you are going to be filing for divorce, I would do my best to do some independent research and go and take pictures of all the assets.
- Failing to disclose bonuses, delaying pay raises, repayments, etc. and not disclosing insurance payouts. If there is an insurance payout coming, then make sure you know when it is coming. I had an entire case built on a check for $12,000 for repairs to the marital home. It came in while the case was being negotiated. One party decided to hold on to the check and deposit it after the case was finished.
- Undervaluing collectibles, jewelry, antiques, or hiding them. I was involved in case where one party had managed to lose all the oriental rugs. These were worth thousands of dollars but when it came to dividing the assets, poof! They were gone. In another case, once the case was over, one party claimed the other had taken the baby grand piano. How would you carry that in your truck?
- Inflating business assets or debts of a business. You are going to have to get the tax records and the bookkeeping to see what is expensed. There could be thousands of dollars embedded in the deductions that aren’t legitimate.
- Inflating debts or expenses. When clients create budget lists, I have seen outrageous claims for expenses. I have seen car maintenance fees that cost more than a car payment per month. Or deductions on paychecks, that go into savings accounts. Look at the pay statements. Make sure the deductions are legitimate and not a Christmas savings account!
How do you find the hidden assets?
- Financial discovery comes in handy when you are looking at expenses and in finding out where is the money going. How much are they spending of their discretionary funds on eating out, vacations, travel? I have seen people try to hide their use of marital funds by claiming they are business expenses and saying they will be reimbursed. Ask for reimbursement statements as well.
- Look at the household expenses against the outgoings. If they say they are spending $1,000 a month on groceries, then check this against the actual charges at the grocery store. Do they match? I had a client who went through every single budget item to show it was expanded substantially when it was put before the court.
- Employment documents. If one party is paid by bonuses or commissions, then make sure you see all the employment documents. You can depose their employer or subpoena the HR records.
- Tax records.
Public records can be used to find transfer of title in real estate or to find out if there is real estate your spouse may own.
- Forensic accounting. If you hire a forensic accountant, they will be looking specifically for misconduct in the bookkeeping. This can be expensive, but it may be worth it if you are delving into what legitimate expenses a business is claiming.
There are other ways to look for hidden assets but it still happens that people can get away with dissipating or hiding assets. One important thing to take pictures of your assets if you are leaving the house. You may have completely forgotten by the time you get to trial. In the case of the oriental rugs, the party had photographs of them and was able to point out which rugs were missing. The baby grand piano, we never recovered.