The more diverse and complicated your marital assets are, the more difficult it can be to ensure that they’re accounted for when divorcing spouses divide their property and support payments are ordered.
Divorce attorneys and forensic accounts can cite numerous examples of people who tried some pretty ingenious ways to hide money or other assets to avoid splitting them with their spouse. Let’s look at some of the most common ones:
Under-valuing their income or business
If your spouse’s income is solely their salary (or hourly wages), it’s pretty simple to track. However, if they’re also paid in stock options and/or bonuses, they may be able to ask their employer to postpone those payments until after the divorce. The same is true with raises. If they receive some or all of their income in cash, it’s easy enough to hide from their spouse if they don’t report it on their taxes.
If someone just scored a big contract with a client, they may postpone the signing of that contract until after the divorce. They may hide information about the pending contract so it’s difficult to find.
Using phony payments
Business owners can also hide money by paying a “salary” to a nonexistent employee. That minimizes the value of the business. Then all they have to do is void the payments after the divorce to get the money back on the books.
Sometimes people will “pay” friends or family members for services or products they didn’t receive or claim that they owed them money. After the divorce, the recipient of that money gives it back to them.
Finding creative ways to hide assets
A spouse may set up a custodial account in their child’s name and Social Security number and deposit money to it. Then they withdraw the funds after the divorce. People sometimes buy expensive items for their new boyfriend or girlfriend, or they may purchase municipal bonds that don’t pay interest and therefore won’t show up on their tax returns.
The tricks people use are virtually endless when they don’t want to play fair in a divorce. If you find evidence or strongly suspect that your spouse is attempting to hide money or other assets, it may be worth the expense to hire a forensic accountant who can uncover it. This will help ensure that you get a fair settlement.