• calendar5th Nov 23 11:00 pm
  • userJamie

Hidden Assets In High Net Worth Divorces: Strategies To Uncover And Address

During your marriage, you likely trusted your spouse without worry. You loved each other, and there was no reason to think your spouse would hide anything, including assets, from you. Did you know that, based on a study by National Endowment for Financial Education, 43% of U.S. adults who have combined finances in a relationship have deceived their partner regarding money? If someone is willing to deceive their partner during the relationship, it is not unreasonable to consider that they may try to deceive them during a divorce by hiding assets. High net worth divorces can be complicated not only because of the number of assets, but because of the possibility of hidden assets. If you think your spouse may be hiding assets during your divorce, you may want to consider a free consultation with an experienced Colorado divorce attorney at Colorado Divorce Law Group. Call (720) 593-6442 to schedule your consultation and learn more about your legal rights.

What Does It Mean to Hide Assets?

Hiding assets can happen in many situations. Someone may legally hide assets by placing them in a trust to protect them from debt collectors or lawsuits. In some cases, assets may be legally placed in a trust to protect them from divorce. However, someone may also hide assets illegally to avoid having them included in their net worth during a divorce.

If an individual hides valuable assets from their spouse to make it look like they have fewer assets or less wealth than they actually have, this is a form of perjury and can have severe legal consequences for that individual. This applies to any asset, as almost every asset that exists may be hidden in some way.

Why Would Spouses Hide Assets in High Net Worth Divorces?

In some cases, a hidden asset may not actually be hidden, but is simply an oversight by the spouse who failed to disclose it. For example, they may have legitimately forgotten about an investment made or stock options purchased many years ago. In most cases, hidden assets are deliberately hidden by the spouse.

While there are many reasons an individual may want to hide assets in high net worth divorces, two of the most common reasons are:

  • To decrease their income and pay less child or spousal support.
  • To keep an asset they do not want to share with or give to their spouse in the divorce.

What Kind of Assets Can Be Hidden?

If an asset exists, it is likely it can be hidden. Examples of assets that a spouse may hide during a high net worth divorce can include:

  • Stock
  • Investment accounts
  • Bonuses
  • Real estate
  • Offshore accounts
  • High value goods
  • Trademarks
  • Patents
  • Copyrights

High value goods can include:

  • Expensive art
  • Jewelry
  • Fine wines
  • Cars
  • Homes
  • Boats
  • Planes

When thinking about hidden assets in a divorce, the question is not just what they are, but how the assets are hidden.

How Would a Spouse Hide Assets?

Because there are so many different types of assets, there are also many ways in which they can be hidden. Some of the ways an individual may hide assets include:

  • Not telling their spouse about a raise and putting the extra money in a hidden account.
  • Hiding cash or material assets in a safety deposit box in their name only.
  • Getting cash back when shopping with a debit or credit card and hiding the cash.
  • Buying possessions they know they can return or resell after the divorce is final.
  • Paying off a loan that never existed from a family member or friend knowing the money will be returned after the divorce.
  • Loaning or gifting money to a family member or friend knowing they will give the money back after the divorce.
  • Filing taxes separately and overpaying for a refund they expect to receive after the divorce or checking the box to apply the overpayment to future tax years.
  • Buying digital assets.
  • Failing to disclose cash income from side jobs.
  • Buying prepaid or gift cards and hiding them.
  • Gifting assets to friends or family with the intention of the asset being returned after the divorce.
  • Asking their employer to delay promotions, raises, or bonuses until the divorce is final.
  • Siphoning funds into secret bank accounts.
  • Physically hiding an asset and claiming it was lost, stolen, or sold long ago.
  • Using a business to hide cash by including it in the profits or showing significant losses.

This is not a complete list of the ways in which assets can be hidden. If you think your spouse may be hiding assets, an experienced attorney from Colorado Divorce Law Group may be able to assist you in investigating and finding the hidden assets.

How Can You Find Hidden Assets?

The purpose of hiding an asset is to attempt to keep the other spouse from finding it. Therefore, it is unlikely that it will be easy to find hidden assets, particularly in high net worth divorces in which there are often so many assets to keep track of. If an individual was not very involved in the marital finances, sometimes called the “out spouse,” knowing whether the other spouse is hiding assets may be very difficult. However, there are some methods of attempting to determine whether any assets have been hidden.

Tax Returns

Particularly for couples who did not file tax returns together or if one spouse trusted the other to complete and file their tax returns, looking at returns from previous years may reveal real estate holdings or investments that the individual was not aware of. They can also look for credits or deductions that may indicate hidden accounts or other sources of income not listed on the return. Additionally, if there was a refund given that cannot be found in any of the bank accounts the individual knows about, this may indicate a secret account.

Another method of hiding assets includes overpaying taxes and having the IRS apply the overpayment toward next year’s taxes. Then, next year, if they have overpaid again or have not underpaid, they may get the money back as a refund.

Bank Account Records

Bank account records can be a great source of information for hidden cash or assets. Look for large deposits or withdrawals that are inconsistent with normal spending for the family. Other indications of hidden cash or assets include transfers to accounts in other names or with other financial institutions. These types of transactions may indicate the spouse has a secret bank account or that they are sending money to a friend or relative with the intention of getting it back later.

People Close to Your Spouse

Employers, colleagues, relatives, and friends can all be very informative about an individual’s financial activities. Employers or colleagues may be aware of income that was not reported, such as raises or bonuses. Friends and family, as well as employers and colleagues, may know about potential investments, real estate holdings, and other secret assets. However, these people may all feel a sense of loyalty to the individual, so it may be easier to get this information from them if a lawyer approaches them and perhaps even subpoenas them for the information.

Business Records

Business records that may help uncover hidden assets or cash include the records for profits and losses. Individuals should also look for investments made by the business or payments received by the business that were unreported on tax returns. These can also indicate secret money or assets.

Tax Assessor’s Office

When looking for high value assets such as real estate holdings, the tax assessor’s office can be a significant source of information. The tax assessor will have documents such as property ownership records and other documents that indicate real estate holdings or investments, as well as documents for mortgages an individual may have taken out.

Additionally, if the spouse spends a lot of time in another county or state, or has family in another county or state, it may be a good idea to check with the tax assessor’s office there as well. In this case, not only will an individual look for records in their spouse’s name, but also records in the relatives’ names to see whether property was recently transferred from their spouse to the spouse’s relative.

Hire a Forensic Accountant

In high net worth divorces, it is often worth the expense to hire a forensic accountant. These types of accountants have specialized training and skills that allow them to analyze records and use other skills and tools to find hidden assets. Forensic accountants can also be helpful in tracing assets if there is a dispute over whether a particular asset is a marital or separate asset.

What Are the Penalties for Hiding Assets in a Colorado Divorce?

While there are certain situations and methods for protecting assets that are legal, it is illegal to hide any assets, particularly during a divorce. If an individual is caught hiding assets, they can be held in contempt, as it is a form of perjury.

Being held in contempt can result in paying fines or even spending time in jail. Additionally, the court may assign greater benefits to the party who did not hide assets. In other words, if an individual hides an asset, the judge may give the asset or more of the profits from the sale of that asset to their spouse.

Are You Concerned Your Spouse May Be Hiding Assets in Your High Net Worth Divorce?

High net worth divorces are complicated. There are many assets to be sorted out and divided between the spouses. If the spouses are not able to get along, there may be many arguments over who gets which assets and whether an asset is marital or separate property. Hiding assets will only complicate the divorce even more. If you think your spouse may be hiding assets, you may want to discuss your legal options with one of our experienced Colorado divorce attorneys. Call Colorado Divorce Law Group at (720) 593-6442 to schedule a free consultation.