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Is your spouse hiding assets?

On Behalf of | Apr 26, 2019 | high asset divorce | 0 comments

New York state divides marital assets equitably, which is not the same as half. There are a variety of metrics that go into determining what “equitable” means and a judge will often be used to make a final decision. Generally speaking, however, this means that the bigger breadwinner will retain more money in the settlement, so there is sometimes a temptation to stash money or assets out of site. Not only is this illegal, but the penalties can also be severe. Nevertheless, people still try.

Typical examples of hiding money include opening offshore bank accounts, starting hidden retirement accounts or deferring compensation for work until after the divorce. One CPA even overpaid the IRS, knowing that a refund check would eventually be issued.

Where to look

Knowledgeable family law attorneys have extensive experience rooting out different strategies used to hide money. If spouse and attorney are suspicious about hidden assets, looking at various financial statements can provide clarity:

  • Tax returns: The Form W-2 states how much the spouse earns as well as how much goes into retirement plans and other withholdings.
  • Paystubs: These indicate how much is paid into health savings accounts.
  • Evidence of other businesses: Some entrepreneurs have investments in several companies. These can be in other states as well.
  • Evidence of additional income: This can be in a known business with deferred distributions and/or retained earnings partnerships, control corporations or sole proprietorships.

Other suspicious activity

Other red flags include:

  • Change in spending habits
  • Spouse proposes allowances of cash, which means bills come less frequently and are easier to hide
  • Transferring unusual sums between business, brokerage and personal accounts
  • Evidence of cryptocurrency use, protected flash drives or other emerging forms of currency and investment

Knowledge is power

It never hurts to understand how the household’s finances work even if the other spouse pays the bills or handles investments and money matters. A knowledgeable family law attorney will be useful throughout the divorce process, but even then they may need to bring expert forensic accountants, art experts and others to accurately determine the value of the marital property so it can be accurately divided.