Key Takeaways
- During divorce, both parties need to provide records of things like income, assets, and debts.
- It’s not rare for someone to hide assets or valuable items.
- There are signs to look out for. For example:
- Changes to self employment income, changes in deposit/withdrawal activity
- Changes in how much or how often a spouse contributes to family expenses.
- Claiming not to have money but spending it.
With divorce looming on the horizon, it’s important to get your proverbial ducks in a row. Particularly when it comes to finances. During the process, both parties need to provide records of income, assets, debts, and all the rest. These will then be divided according to the law based on various factors.
Is Hiding Assets During Divorce Common?
Yes. It’s tempting and not uncommon for someone to squirrel away assets or hide valuables during a divorce. While not an exhaustive list, here are a few things to watch out for.
Changes in Self-Employment Income
Being a business owner isn’t in and of itself a warning sign, but it does provide creative opportunities to conceal assets. If a business has been profitable but then takes a sudden, drastic downturn, it may be a red flag.
Be wary of drastic changes in reported income and unexpected increases in operating costs.
Overstating expenses and understating income are two methods of making a business appear less profitable, and thus less valuable than it is in reality.
Not letting you access the business’s financial records may be a tip off. There are many specific concerns and potential consequences you face in owning a business.
Related Reading: How Is A Business Divided In Divorce?
Income/Lifestyle Discrepancy
If someone lives large, but claims to have no money, that may indicate something is awry with the financial disclosure.
Additionally, changes in how much or how often a spouse contributes to family expenses can be a warning sign of hiding assets.
Changes in Deposit/Withdrawal Activity
If you notice sudden changes in banking activity, it might be worth taking a closer look. Patterns shifting after years of consistency and predictability may indicate shenanigans are afoot.
It isn’t uncommon for spouses to make cash withdrawal or to start diverting money into new accounts when a divorce is inevitable.
Being Overly Assertive About Signing Financial Documents
If your ex insists you sign important financial documents immediately, it may signify an attempt to hide assets. Pressuring you to act quickly may be a strategy to get you to overlook something significant.
This can encompass everything from wanting to be added to property via title or asking you to sign quitclaims that release interest in titles or accounts.
Don’t give in to the pressure and don’t sign anything just because. Take the time to read all documents. If you don’t understand them, find someone who does.
Related Reading: High Asset Divorce Mistakes
Being Secretive About Finances
Being secretive about finances or getting cagey when you ask about bills, expenses, income, or spending, may also be a red flag. Keep an eye on credit card statements and monitor credit reports before, during, and after divorce. Spouses commonly max out lines of credit or open new accounts.
People often accumulate clothes, jewelry, and other expensive items on joint accounts, which may be divided in divorce.
Increase in Gift Giving
Giving gifts of cash or assets to family members is a common way people try to hide assets. If a spouse starts handing out money or property before filing for divorce, those assets may be out of reach when it comes to the division of property.
This is especially challenging when it comes to overseas relatives. Money held in offshore accounts can be particularly difficult to locate and even harder to recover.
Notice Any Unfamiliar Financial Institutions?
Divorce or not, pay attention to bank statements, credit card bills, and other financial documents. If you start seeing documents from financial institutions where you don’t have accounts, take note. This may indicate your spouse opened new accounts and is trying to move funds from joint accounts to one you can’t access.
Finances are complex under normal circumstances. As with most things, divorce only further complicates the matter.
Related Reading: How Will Courts Divide Your Debt?