Parties to divorce sometimes accuse their spouses of hiding income or assets. Unfortunately, such accusations occasionally are true.
Clearing the fog
Failure to disclose income or assets may be explained by a simple lack of knowledge. A spouse may not realize, for example, that an executive benefit provided by their job is included in the marital estate. Or, driven by anger, mistrust, or a desire to punish — emotions that surround many divorce actions — a spouse may deliberately choose not to disclose the existence of certain assets.
Forensic accountants can help clear the fog and validate or disprove a divorcing spouse’s claims. They work with attorneys to review bank accounts and financial records and can testify in court, if necessary.
There are a number of ‘creative’ ways for divorcing couples to distort their true financial pictures. For example, a spouse might repay non-existent debt to a friend, and then retrieve the money when the divorce is final. Or, someone might shelter funds in undisclosed life insurance policies. Other common methods of hiding income and assets include:
- Delaying the receipt of bonuses or stock options
- Overpaying credit cards to make the balance available later
- Failing to reveal the existence of retirement accounts
- Investing in certificate ‘bearer’ bonds
- Undervaluing art, antiques, & collectibles
- Setting up custodial accounts in the names of children, using the children’s Social Security numbers
Spouses who are business owners have additional methods of hiding assets. They might, for example, pay ‘ghost’ employees and then void the checks once the divorce is final, or they may delay new business contracts.
True financial picture
These and a host of other attempts to conceal assets may be uncovered by fraud experts. Contact us if you need help getting to the bottom of fraud accusations in a divorce or other litigation context.