If you and your spouse are terminating your marriage, you probably realize that you will have to legally divide your assets and debts. As a general rule, all assets and debts that you or your spouse have acquired during your marriage are considered marital property, although there are a few exceptions that you can review with your attorney. Courts will usually divide all marital property equally and award each spouse his or her separate property.
While this is often the appropriate way to divide assets, there are times when one spouse may not wish to divide the marital property. In some cases, a spouse will take matters into his or her own hands by hiding assets to prevent them from being divided. This behavior is not only unethical, but can also be also subject to punitive recourse by the Court. Although it may seem that hidden assets would be obvious to the other spouse, this is often not the case. Sometimes the spouse who hid the assets had months or years to do so. Other times, the spouse who hid the assets may have been the only spouse managing the family’s finances.
Follow the money
Hidden assets may not always be obvious, but there are ways to find them. If you think your spouse may have hidden assets, consider combing through your family’s financial records in search of anything strange. When a spouse wants to hide an asset, he or she may attempt to do so by denying the asset exists, transferring the asset to a third party such as a family member or close friend, claiming the asset was lost, or creating fake debt.
It can feel overwhelming to look through all your family’s financial records over the past few years, so a good place to start is your family’s tax returns. You may check to see if the itemized deductions section lists a source of income of which you are not aware. You may also want to pay close attention to gains and losses listed in Schedule C and Schedule E of your tax returns. Anything you are not familiar with could be a red flag. You can also review financial account statements to ensure you are familiar with all accounts either transferring money to or receiving money from your accounts, or that cash withdrawals are not being made in excess.
Distrust between spouses is understandable during the process of terminating a marriage. In the majority of cases, nothing has been hidden. If you suspect your spouse has hidden assets, finding evidence of those assets may help you protect your right to receive a fair share of that asset. Because it is financial misconduct to hide assets, a court may even award you a more favorable division of marital property.