Divorcing spouses sometimes resort to hiding money when they know a divorce is just around the corner. Even though this is illegal and can carry hefty penalties when discovered by the courts, an individual might start to do this out of spite, greed, or anxiety about finances after the divorce. Proving that a soon-to-be-ex is doing this can be difficult, so leading divorce attorneys and wealth managements advisers have some tips to be on the lookout for before a divorce happens and during the proceedings.
It cannot be said enough that it is important to take an active role in your finances. Knowing where documents such as your tax return, bank statements, and credit card bills are is critical. And if you have gone paperless, knowing the online passwords is also helpful. Without knowledge of the marital assets, income, debts, and expenses, it can put you in a position of vulnerability. Yes, a divorce attorney can have a forensic accountant research the marital finances, but if you were already aware of your finances and the other spouse’s financial status to a large degree, you would be far more empowered.
If you are already on the path to a divorce and starting to feel that the other spouse is starting to act strange in regard to finances, there are some signs that could show assets or income is being hidden. It usually starts with defensive behavior where an individual becomes angered, controlling, or secretive about finances. If there is a sudden drop in income that seems unusual or unplanned, this can be a sign too. Some individuals will work with their employer to hold off bonuses, commissions, or salary adjustments until after the divorce.
Other strange behavior includes financial statements no longer being sent to the home. Especially if the two of you still live together and have not gone to paperless delivery, you will want to call any banks, investment companies and credit card institutions to get the latest account statements. If you find any big discrepancies at any time, let your divorce lawyer know so that a paper trail can be started to show the deficit.
Some individuals also start to overpay creditors and others to have it appear that they have less money. This can mean they overpay IRS, pretend they are paying off loans to family members, and even transfer money to the children. Once the divorce is over, the individual will then get an IRS refund, get the money back from the relatives or pull it out of the child’s account. This is not only deceptive, but immoral too.
Also, when the soon-to-be ex is a business owner, look for ways that he or she might be manipulating those finances. Hiring new employees, paying friends and family for work, and delaying new client agreements can be ways to make the company have less money. After the divorce is over, family could give back the money and those new employees could go away. And a wave of new contracts could come in. Being sneaky like this does not pay off, so alert your divorce attorney should you become aware of such activities.