First Steps in Finding Hidden Assets

 
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By Alycia Watt


Divorce is never fun, especially when it comes to money. Nothing is worse than when two people decide to end their marriage and one person takes it upon themselves to keep as much as possible.

That is where we come in. Many divorces start off amicably, as simple as two people who no longer want to be with one another, but something changes. Maybe one spouse talks to an attorney who feels they should be able to keep more of their money, or another spouse doesn’t want to “give up” their wealth. At that moment, things start to get interesting.

We have seen cases and heard stories where one spouse will give money to family members as a gift in order to show that they have less during the course of their divorce. More often, we have seen one spouse prepare for their divorce years in advance by moving assets or income out of their account so it can’t be recovered. There have even been times we have seen spouses hiding a second family or a secret significant other. If there’s a way to hide assets or expenses from a divorcing spouse, we’ve probably seen it. The good news is there’s almost always a way to find hidden assets--you just need to know where to look.

Where to Start

For many of our divorce clients, their spouse is relying on the fact that our client doesn’t know much about their financial status. This can be remedied. We recommend anyone hoping to get a better picture of their marital finances start in a few places: bank statements, credit card statements, tax returns, and payroll stubs.

Bank Statements - A printed record of the balance in a bank account and the amounts that have been paid into it and withdrawn from it, issued periodically to the holder of the account. Bank statements show when and where money was spent and for how much. When reviewing bank statements, keep in mind the bills for all current residences that are to your knowledge. Any extra bill payments to a different home or commercial building could point to a business or even a second home.

Credit Card Statements - A document sent by a credit card issuer once per month detailing the cardholder’s account activity, including payments made toward the account balance, purchases, balance transfers, cash advances, and fees and interest charges incurred. When reviewing credit card statements, keep in mind when things were bought, what they were, and where those things have ended up. We have seen something as simple as the purchase of a necklace reveal a second significant other.

Tax Returns - A form on which a taxpayer makes an annual statement of income and personal circumstances, used by the tax authorities to assess liability for tax. Tax returns can help identify assets, a spouse’s actual income, or if they are receiving royalties.

Payroll Stubs - An itemized list of an employee's wages and deductions for a specified pay period that may be attached to a check, or given to an employee upon a direct deposit transaction. Use Payroll Stubs and Bank Statements to determine whether or not all of a spouse’s monthly income is going into their bank account by matching up the numbers. If they do not match that could mean there is a second account they are depositing to.

Additional Steps

Take Inventory - Any expensive jewelry, art, or antiques have value in a divorce and whether both parties decide to split these items between them or sell them, it is important to keep track of these items and their actual worth. Some people even go as far as doing a video inventory to prove the existence and where these items are stored. We have seen cases where one spouse is aware that these items exist but they have somehow gone missing without any proof of where they went.

Perform a Lifestyle Analysis - This is an analysis of each party’s sources of income and their expenses. During a divorce, one party will often attempt to state that they make less than they actually do. For example, a spouse may state that they make $2,000 a month but have monthly expenses of $6,500. In these cases a party can review their spouse’s bank statements, payroll stubs, or tax returns to verify their monthly income.

Business Valuation - The analytical process of determining the current (or projected) worth of an asset or a company. This is especially important if a spouse started their business while both parties were married. If they undervalue their business, the other party can have a forensic accounting team evaluate the actual worth of the company.


For more information, listen to our podcast episode with Leah Wietholter and Megan Brown on finding hidden assets.

https://www.workmanforensics.com/podcast-episodes/episode-4-finding-hidden-assets

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