Financial Fraud and Hidden Assets During Divorce: What You Need to Know

 Posted on December 09, 2021 in Divorce

A crucial aspect of the divorce process is the division of the couple's assets and debts. Divorcing spouses may need to address the marital home, vacation homes, bank accounts, retirement assets, investments, business interests, and much more. However, to discuss these issues practically, both spouses must fully disclose their income, property, financial resources, and liabilities. Lying about finances, undervaluing property, or failing to disclose assets are all forms of financial fraud that can impact a divorce considerably.

What Does Financial Fraud Look Like?

Spouses who want to shield money or property from division during the divorce may use several different methods to falsify financial information. Some fail to disclose offshore accounts, business interests, or other assets that the other spouse is unaware of. Others undervalue the worth of assets. For example, a spouse may buy an expensive piece of art but report that the art’s value is only a fraction of its true value.

One of the most common and simplest forms of financial fraud in a divorce is hiding assets by transferring them to other locations or to other parties. For example, a spouse may transfer money to a friend or family member under the guise of paying back a debt that never actually existed. Once the divorce is complete, the friend or family member returns the money to the spouse. Divorcing spouses may even use the IRS to temporarily harbor funds by overpaying taxes and then recouping the money in a future tax refund.

If a divorcing spouse owns a business, there are an even greater number of avenues for financial deception. For example, a spouse may delay invoices, cut prices on goods or services, or falsify business records to make a business seem less valuable than it is.

How Can I Uncover Signs of Hidden Assets?

It is nearly impossible to commit financial fraud in a divorce without leaving clues of the deception. Bank account statements may show unusual transactions or transfers or large cash withdrawals. Tax documents may show sources of income that point to undisclosed assets. Credit card statements and loan applications may reveal undisclosed assets or income sources. Business financial records may also show discrepancies that point to financial manipulation during a divorce.

An experienced divorce lawyer may use discovery tools like document demands or depositions to uncover signs of hidden assets. Sometimes, attorneys work with forensic accountants who scour a spouse’s personal and business financial records for indications of deception or manipulation.

Contact a Naperville Divorce Lawyer

The division of property in a divorce must be based on accurate financial information. If you suspect that your spouse will hide assets, contact a DuPage County divorce attorney for help right away. Call J. Aldrich Law, P.C. at 630-953-3000 for a free, confidential consultation.

Source:

https://www.forbes.com/sites/catherineschnaubelt/2019/03/08/finding-hidden-assets-in-a-divorce/