Financial issues involved in a divorce can become rather complicated, especially when one or both spouses attempt to hide income or assets. This can happen for a number of reasons, but the motivation for hiding assets, like property, and failing to report income is typically so that they are not included in the marriage settlement.
Clearing the fog
Failure to disclose income or assets may be explained by a simple lack of knowledge. A spouse may not realize, for example, that an executive benefit provided by his or her job is included in the marital estate. Or, driven by anger, mistrust or a desire to punish — emotions that surround many divorce actions — a spouse may deliberately choose not to disclose the existence of certain assets.
Forensic accountants can help clear the fog and validate or disprove a divorcing spouse’s claims. They work with attorneys to review bank accounts and financial records and can testify in court, if necessary.
There are a number of “creative” ways for divorcing couples to distort their true financial pictures. For example, a spouse might repay nonexistent debt to a friend, and then retrieve the money when the divorce is final. Or someone might shelter funds in undisclosed life insurance policies. Other common methods of hiding income and assets include:
- Delaying the receipt of bonuses or stock options
- Overpaying credit cards to make the balance available later
- Failing to reveal the existence of retirement accounts
- Investing in certificate “bearer” bonds
- Undervaluing art, antiques and collectibles
- Setting up custodial accounts in the names of children using the children’s Social Security numbers
Spouses who are business owners have additional methods of hiding assets. They might, for example, pay “ghost” employees and then void the checks once the divorce is final, or they may delay new business contracts.
A fraud expert can uncover the true financial picture when these and many other methods are used to conceal assets. If you have questions or want help getting to the bottom of fraud accusations in a divorce or other litigation, JLK Rosenberger can help. For more information, call us at 949-860-9902 or click here to contact us.