In our previous post, we began a discussion of hidden marital assets, noting it is a much more common problem than people realize, it is wrong and potentially criminal, and that it usually involves personal property and liquid assets that would escape the interest of the other spouse. In this post we discuss how spouses go about hiding marital assets.
One need not be very creative to hide a marital asset. For example, spouses often get many gifts at the time of their wedding, and keeping account of all of these gifts for the duration of a marriage may be challenging. When it comes time to begin a physical accounting of all personal property in the marital residence, a spouse may choose to remove some of these gifts and store them at the homes of friends, family or even at their place of business. Unless the other spouse has an incredible memory, it will be challenging to note the absence of a gift like that when the parties tally their joint property.
Personal property with no sentimental value quickly becomes potential cash in the mind of a scheming spouse. Rather than hide the asset with someone else, the spouse may simply take the asset and sell it or pawn it for cash (pawning would be less likely because of the need to leave a driver’s license or other identifying information with the purchase, but those can be faked too). The Internet is a global marketplace, and setting up a fake account on eBay would allow a spouse to sell assets off with little difficulty, insisting on a cashier’s check for payment.
A spouse may try to hide income through some clever accounting with his or her employer. For instance, a spouse may claim more deductions than actually expended – perhaps for health insurance or medical expenses – and pocket the remainder, or have a reported income and an “actual” income that includes “under the table” payments.
If a spouse owns a business, that spouse can use all sorts of accounting methods to disguise fraudulent transfers as reimbursements or other similar expenses, pocketing the amount as cash.
With regard to income, a spouse can purposely delay big bonuses, raises or new contracts until after the divorce is final.
What all of these techniques have in common is really nothing more than money laundering – taking a marital asset and converting it through various means into a very liquid and hart to trace asset – cash.
Some will go a step further and take the cash and invest it through third parties who basically hold the funds in place of the concealing spouse, so that the asset not only remains hidden but gains interest as well. Moving the money through multiple sources makes the laundering that much more layered and harder to discover.
Now that we have certainly gathered your attention, you probably want to know how to find hidden assets before a divorce becomes final. We will discuss that in our next post.
If you have questions about hidden assets and divorce, contact us – we can help.