Spouses have a right to a fair share of their marital estate and a responsibility to help address marital debts. Unfortunately, some people resent the obligation to fairly divide marital resources.
They may look for ways to control or manipulate the outcome of the property division process. Hiding assets from a spouse and providing inaccurate disclosures to the courts during a divorce are common strategies used to gain an economic advantage that undermines the state’s property division statute.
What warning sign should people look for when preparing for divorce?
Red flags for hidden assets
A lack of financial transparency is one of the most common indicators of attempts to hide assets or divert income. Other times, one spouse might notice substantial transfers from joint accounts with no reasonable explanation.
Lifestyle inconsistencies can also be indicative of attempts to hide assets. One spouse might suddenly drastically reduce their spending on routine household expenses, such as groceries, while income levels and recurring bills remain roughly the same. They may have begun diverting capital to a hidden account or establishing a secret stash of cash by making withdrawals when shopping with their debit card.
Unusual business activity, such as deferring payment from clients or transferring ownership of company resources, can also be warning signs of attempts to hide assets.
How do spouses hide assets?
In some cases, hiding assets involves intercepting income to fund a hidden bank account. Some people go so far as to acquire cryptocurrency and other digital assets that are difficult to track as a means of obfuscating the full extent of the marital estate.
Physically removing assets from the marital home or a business that is technically marital property can be a way to hide resources. Intentionally undervaluing assets, sometimes by tens of thousands of dollars or more, is another way to manipulate the outcome of the property division process.
Those who believe their spouse has engaged in attempts to hide assets or may be likely to, given their personality and previous behavior, may need assistance in the early stages of divorce. They can work with an attorney to conduct a forensic review of household financial records and economic disclosures. They can work with outside professionals to value resources such as business holdings, real estate and collections.
In scenarios where there are suspicions of attempts at financial manipulation, settling outside of court or in mediation can be risky. Litigated property division proceedings often protect spouses through formal financial discovery rules.
Discussing concerns about hidden assets with a divorce attorney can help people identify red flags and locate hidden marital income or property. A thorough financial review can protect people from misconduct that might otherwise deprive them of their fair share of the marital estate in a high-asset divorce.