Divorce is an emotionally messy affair in itself. As if that isn’t enough, there are a lot of legal repercussions, especially if you and your spouse are high net worth individuals.
While filing for a divorce, you may begin to suspect that your spouse is hiding assets from you, especially if they are being dishonest with you when you ask them to disclose the details.
So what can you do if your spouse is hiding assets in the divorce? We have listed five ways you can use to uncover these hidden assets and have a fair settlement.
Hire an Attorney
Discovering hidden assets can be a daunting task, especially if you’re not fully aware of your spouse’s finances and holdings. Both you and your spouse will have a lot to unveil to each other in the process of divorce.
For this reason, hiring an attorney is a wise decision. An attorney will guide you through the steps you need to follow to discover the financial elements that your spouse is unwilling to disclose to you.
If you have a high net worth, your spouse may also do the same in your case. Your attorney will help you to protect yourself from unfavorable outcomes. However, be transparent about your assets so that everyone wins in this situation.
Go Through the ‘Discovery Process’
The ‘discovery process’ is the only formal, legal process you can follow to unveil what your spouse has been concealing from you. Your attorney will obtain permission from a judge and provide you with options.
You can then use those legal avenues to discover the financial information of your spouse.
Moreover, your attorney may even help you hire a forensic accountant to conduct an even deeper investigation if your spouse is uncooperative.
Demand for Documents
After your attorney gets permission from the judge for a non-party disclosure, you can make a demand to your spouse for certain documents. For instance, you can demand to look at all types of assets, liabilities and debts, income statements, and cash flow.
Let’s look at what documents you should ask for.
As high net worth individuals, there are quite a few taxes that you both need to pay. That also means that there are more ways in which you can cover up your tax returns as well. Let’s look at the taxes that you should ask your spouse to disclose:
- Income from wages. This is where you’ll find information about income from all reported sources.
- Interest and dividend income.
- Retirement plans.
- Tax refunds.
- Various deductions.
- Profit/loss and income statements.
- Any foreign account.
Hidden Bank Accounts
If you suspect that your spouse has hidden bank accounts, then your attorney can issue a subpoena which should be signed by a clerk of the court.
The subpoenaed banks must comply with it; otherwise, they’ll have to face legal consequences.
Once you get information about the hidden bank accounts, thoroughly review and analyze the accounts. This includes all the debit and credit, transaction entries, general ledger, trial balance, and financial statements.
If such terms confuse you, then check out this quick guide to the three golden rules of accounting.
Analyze all the cash flow statements. If your spouse mentions certain losses or decrements in their income while filing for divorce, you may find the missing amounts in the entries as money transfers.
Check the account numbers of the individual transactions, and you may find where all the hidden cash is going.
You should also ask for all the canceled checks and wire transfers to see if there’s anything that you had no knowledge about previously.
A financial statement includes a cash flow statement, balance sheet, income statement, and statement of retained earnings.
If your spouse took a loan or has a debt record, then they should have a personal financial statement prepared for the purpose.
Check the financial statement thoroughly to find the information you’re looking for.
Your spouse needs to provide the bank with an application if they have applied for a loan.
Check that application to find the type of loan applied for, the purpose of the loan, property information, monthly income and expenses information, employment information, assets and liabilities, details of transactions, and declaration.
Checking all this information may reveal any hidden income source and asset that your spouse wanted to conceal.
Demand to Inspect Every Asset
There are three main types of asset search:
- Brokerage account search—stocks, bonds, securities.
- Bank account search—locate all bank or linked accounts.
- Public assistant search—locate any payments or benefits the person may be receiving from government departments.
Your spouse may have assets hidden in the form of valuable belongings and gifts besides all the financial assets. List information about all the assets, ‘gifts,’ and transactions that you know of or your spouse has talked to you about in the past.
Your attorney should get permission from a judge to thoroughly search for all the assets with the help of a forensic accountant.
Written Admission to Statements
Outline questions that you want your spouse to answer under oath. If your spouse is not disclosing everything, then this will serve as testimonial evidence against them, making them face legal consequences.
The court may also award you a larger portion of the marital assets as a penalty to your spouse.
If you find out about their hidden assets after the divorce, you can still take action. You simply have to file a motion about the hidden assets in the court where you filed for divorce and ask to reopen your case.
You can also apply for a freezing order as soon as you discover the hidden assets after divorce so that your spouse doesn’t sell or liquidate the assets.
Not knowing what to do to have a fair settlement in a divorce can cost you a lot. It’s wise to have an open discussion with your spouse about all your financial information when filing for a divorce. And if you suspect that they’re hiding assets in the divorce, you can hire an attorney who will help you sort things out.
We hope this article helps you with what you need to do in such a scenario.