What To Do About Hidden Assets In Divorce

By Gerald A. Maggio, Esq.

orange county divorce mediator; California Divorce MediatorsIt is a common occurrence for warring spouses to hide assets when in the course of a contentious divorce. There are a number of ways a spouse may disguise or at least undervalue assets. One of the most common ways is to overlook or undervalue antiques, gun collections, hobby equipment, tools and artwork. Most of them come in the form of original paintings, collectible carpets or antique furnishings at the office of the spouse. There could also be unreported income on financial statements and tax returns.

Hiding methods

Undisclosed cash is frequently kept as travelers’ checks. These can be found by tracing the bank account withdrawals and deposits. There could also be custodial accounts set up in a child’s name using the Social Security Number of that child. Investments in the form of certificate municipal bonds or the Series EE Savings Bonds which do not show in the statement of accounts as they are not IRS registered.

Assets may also be hidden by colluding with the employer. Bonuses could be delayed; stock options given later than usual. The spouse may also request the employer not to give a raise until a time when the income or asset will be regarded as separate property. There could also be a phony debt to a friend or sudden repayment of money as debt. The assets could be hidden as expenses paid for boyfriend or girlfriends, like gifts, rent, or travel. Expenses may also be seen as tuition paid for classes or college. There could also be hidden retirement accounts. 

Business persons

Other than the above, business persons may hide assets in a number of ways like stealing cash from their own businesses. Salary payments can also be made to non-existent employees. These are made with cheques which are made void post-divorce. Money could also be paid to a person close to the spouse, like mother, boyfriend, girlfriend or father for fictional services. Such money is then given back to the spouse post finalization of the divorce. There could also be delays in the signing of longer term business contracts. These are typically done post-divorce.

It is extremely hard to find evidence of such activities. Litigation may help to unearth such deals. To give an example, you can take a legal interview or deposition of the boss of the spouse or the payroll supervisor and then query them about your spouse’s income and the bonuses. You can also hire a private investigator or a forensic accountant.

However, if any of this is a valid concern in a divorce case, then the likelihood of being able to mediate the divorce is very limited, and litigation of the case is the more realistic option.

To learn more about the divorce process in California and how mediation can help where you and your spouse seek to be transparent in providing all information and documentation concerning assets and finances, please visit our page, What is Divorce Mediation