Full disclosure of all financial information is a required and essential part of any divorce, but this is particularly crucial in a high net worth divorce. When a spouse realizes that so much of their future hinges on how marital assets are divided, they may work to conceal or dissipate marital assets so that there will be less for a court to divide – more hidden away for them to keep. If you suspect that your spouse is attempting to hide assets, there are many ways those assets can be discovered and brought to light.
Documents and Account Records
The tax return is the very first place to look for financial information. This will be informative if you aren't up to speed about finances in your marriage. Still, carefully hidden assets will not be obvious there. You'll want your attorney to have recent tax returns as a starting point to begin the search.
If your spouse keeps (and you have access to) paper records or has downloaded copies of electronic records for bank accounts, credit cards, loans, investments, real estate, and business matters, go through these and make copies or take photos for your attorney to examine. If you have online access to accounts, download the records for your attorney.
Bank accounts provide clear and obvious records once they are found. But, all bank records must be scrutinized for withdrawals and transactions that could be mechanisms for transferring funds out to conceal them. Personal funds may be moved to business accounts to hide them, particularly if the business is not a marital asset or if the spouse is not a full owner in that business. The number of accounts in existence should also be examined.
If you and your spouse do most of your personal business at one bank, your spouse could open another account there, and you may not even notice the additional account and assume it's just part of the original set up you did. Shifting funds to new or existing children's bank accounts or to accounts owned by other family members such as parents or siblings is another tactic.
Your spouse may also find a way to open an account in your name that you are completely unaware of, retain access to it, and deposit funds there to shield them from the divorce.
If your spouse has nicknames, former names, or aliases, assets might be placed in those names to make them difficult to find. Making a list of all possible names and Social Security numbers your spouse has, uses, or has access to (such as those for children or parents) can help pinpoint where assets might be placed.
It's also important to make a list of all the addresses your spouse could possibly use on an account, such as vacation homes, parents' addresses, or business addresses.
Another area to check is any hedge fund, private equity interest (look for off-balance-sheet assets), or offshore account in which your spouse has an ownership interest. Funds are often placed in these locations to make them challenging to identify. Additionally, if your spouse owns any real estate that is not a marital asset, it's important to check the financial statements for loans to see if they have been prematurely paid with marital funds.
If loans have been taken out, financial statements were prepared for the banks, and those documents can provide important information. Additionally, changes can be made to existing businesses to hide assets, such as through deferred compensation, deferred bonuses, or restructured stock to keep income from accruing before the divorce.
Any business that is a cash business, or partly a cash business, can easily be manipulated to hide incoming funds, so these must be carefully dissected. Your spouse may use businesses they own to pay sham "expenses" to consulting firms or contractors to hide funds. Forming a new company but keeping it clandestine is another way to funnel assets out of the marriage.
State secretary of state or division of corporation offices maintain records of LLC and corporation businesses formed in the state with the names of members, directors, and shareholders. Publicly traded companies are registered with the Securities and Exchange Commission. Both are searchable.
Not only can your spouse hide actual cash (you'll need to think about any safes, safe deposit boxes, or hiding spots in your homes where it could discreetly kept), but money can be hidden in other ways. Taking out new life insurance policies which will have a cash value is one strategy. Cash can also be disguised by buying traveler's checks, savings bonds, bearer bonds, and cryptocurrency.
Another avenue to pursue is whether your spouse has given "gifts" or "loans" to family, friends, or employees. This is a technique used to move funds out of marital or business accounts and recoup them later. Gifts might be cash or they could entail purchases of real estate, jewelry, art, or other expensive items. Money can also be placed in a trust to conceal them from the divorce inquiry.
Hobbies and Lifestyle
Carefully consider your spouse's lifestyle and interests. Make note of places they travel to frequently as they may be hiding assets there. Funds can be drained from marital accounts and used to buy airfare, private jet shares and times, and pay in advance for hotels, villas, boat rentals, tours, golf, and more. Making a list of your spouse's most common destinations and hobbies can help pinpoint some of the strategies they may be using.
Hidden assets can dramatically impact your divorce property division, so every asset must be located. If you suspect your spouse is hiding assets, you should work with an attorney who is experienced with this kind of situation and who utilizes a team of forensic accountants and private investigators as needed.