If you suspect (or know) your spouse isn’t being forthcoming about what’s going on with your marital finances, and a divorce is imminent, what should you do? Your best first step is to hire an experienced divorce attorney who can explain how to find money hidden by spouse and what legal steps you could take to protect your portion of the marital estate.
As a family law attorney , I frequently hear concerns from clients who are worried their spouse is hiding assets in divorce. While some clients have good reason to be concerned about hidden assets, others do not. Feelings of animosity and emotional turmoil that commonly arise during divorce can make the most even-keeled people in the world get suspicious about their spouses’ activities, even when nothing untoward is going on.
That being said, divorce attorneys do need to take all client concerns seriously, so when a client has questions about how to find hidden assets in divorce, we want to learn more.
Is it possible and is it probable your spouse is hiding assets in divorce?
Those are two key questions a knowledgeable divorce lawyer will want to analyze when a client brings up suspicions of hidden assets. While intentionally hiding assets from a spouse does happen, it’s also true that some assets may be inadvertently overlooked or forgotten during the discovery phase of divorce (the phase when financial documents are exchanged and examined by the two parties during divorce).
Which brings us back to the question: Is it possible your spouse is hiding assets? In general, most people spend what they earn—they live paycheck to paycheck. If you can identify with that type of financial situation, and you generally:
- Know what your household income tallies up to each month;
- Watch what’s going in and out of your bank accounts;
- Keep an eye on credit card statements for unusual charges; and
- Haven’t seen any red flags (unusual transactions) …
It’s possible but unlikely that your spouse is hiding assets—and it’s also not probable. That’s not to say something fishy isn’t going on but the likelihood is low.
On the other hand, if you’re in a marriage where your spouse handles the majority of the financial transactions and gets evasive or defensive when you ask questions about your finances, it’s definitely possible something is up. That doesn’t mean he or she is necessarily hiding assets but it does mean you need to find out what’s going on with your financial situation (which is ALWAYS a good idea).
Now, say you do get access to your financial accounts and find that your spouse is making serious ATM withdrawals on a regular basis (like several hundred or thousand dollars every month) and not telling you about it, that is a major red flag. Or, say you check your credit card statements and notice charges for expensive items or hotel rooms you knew nothing about, that’s red flag number two. Not only is it possible that your spouse is hiding assets, I’d venture to guess that it’s probable as well.
We’ve also seen cases where a spouse knows with certainty that their ex has perpetrated fraud or hidden assets from other parties during the marriage. For example, they may know the party has tried to conceal income from the IRS or from an ex who is trying to collect child support from them.
If you’ve witnessed your spouse perpetrating fraud against others by way of concealing assets, it’s more likely that they would try to perpetrate fraud against you by hiding assets during divorce. That doesn’t mean that they will but having the propensity to do so raises the importance of questioning how to find money hidden by spouse with your divorce lawyer.
Other ways spouses try to hide assets during divorce
If you’re married to someone who owns a business or has a job where they get paid irregular amounts on a sporadic schedule or they only take cash payments, it can be easier for them to play a little smoke and mirrors game with the marital finances. This is especially true if they are not transparent or forthcoming with you about their work and business dealings.
We’ve seen parties move money around related to closely-held entities like a family business in order to reduce the value of the marital estate. For example, they may decide to pay down some debt in the business to bolster the business’s books. Alternatively, they may incur debt on the community estate, then take the debt as liquid cash and put it into something related to their business, so it looks like a business transaction.
Simply put, they’re diverting cash from the marital estate into the business, which diminishes the value of the community estate. Technically, they’re not hiding the assets but morphing those assets into something that is very difficult to tangibly divide because it doesn’t create any value on the backend.
We’ve also seen cases where a party will prepay their business taxes to the tune of tens of thousands of dollars in the last quarter of the year right before a divorce was being finalized. Again, those funds were diverted from the marital estate to the business, and without a savvy attorney, the other spouse ends up left out in the cold.
Another ploy we see inside divorce cases, is where a party will pay advanced attorney’s fees out of community funds. Other parties try to pull one over on their spouses by making a loan out to a relative or close friend, with the intent that the loan won’t get paid back until after the divorce is finalized. We’ve also seen other behind the scenes scenarios, where a spouse acquires assets or enters into “business” ventures with third party friends and/or relatives so there’s no liquidity to the asset in question.
How to find money hidden by spouse
Now that we’ve covered when it’s generally possible and probable that you will need to find hidden assets in divorce, along with some of the common ways spouses hide assets, let’s discuss the meat of this post: how to find money your spouse has hidden.
If you haven’t already taken proactive steps to learn more about your marital finances and get access to financial accounts, there’s no time like the present. The longer you wait to find out where money is coming from and where it’s going, the more difficult it will be to track it down.
Now, there are situations where a party doesn’t want their spouse to know they are suspicious or considering divorce. They may fear they could face repercussions in the form of family violence or that their spouse could drain their financial accounts.
These are both very valid concerns and why I highly encourage parties to consult an experienced divorce lawyer to help them both find hidden assets in question and preserve any assets remaining in the marital estate. That’s truly your first line of defense, but how do divorce attorneys help clients with finding hidden assets?
Assist in compiling an inventory of the marital estate. This is a critical step during the divorce process, and something I encourage people to do as soon as they have an inkling a divorce may be imminent. Your inventory should include both assets and debts, including bank accounts, credit cards and other loans (mortgages, vehicles, etc.), retirement accounts, investment accounts, life insurance, trusts, etc.
It should also include tangible assets like homes, rental property, land, vehicles, livestock, personal items of value, etc. If you and your spouse have any business interests, any information related to those should be included as well. You should also make note of the estimated income from both spouses, along with monthly expenses.
You may not have detailed information or account statements pertaining to all of the items above but your attorney can help you request access to financial accounts and account statements when you’re ready to file for divorce (or if your spouse has already filed).
Run credit reports and do a forensic analysis of financial accounts. While credit reports don’t reveal everything, they do reveal a lot. For example, if a credit report reveals large balances on credit cards a party knew nothing about, analyzing those credit card statements can reveal a wealth of information about their spouse’s activities (spending and otherwise).
In addition, if you’re wondering how to find hidden bank accounts of spouse, running a credit report is a good place to start. While credit reports don’t reveal bank account balances or transactions, financial institutions can and often do report negative account activities (bounced checks, unpaid bank fees, etc.) to the credit bureaus.
If a party won’t release information about financial accounts (hidden or otherwise) to their spouse, the spouse’s attorney can ask the court to order the party to do so. Both parties are required to share this information during the discovery process but a request can be made to the court prior to discovery to monitor cash flow and help ensure bank accounts aren’t drained in the meantime.
With access to logins, passwords, bank statements and other financial documents in hand, a resourceful divorce attorney can get a more accurate picture of a couple’s marital estate. Bank statements can be very revealing. What we sometimes find by analyzing bank statements (hidden accounts and otherwise) is the mistakes careless spouses make when trying to clandestinely move money around.
For example, a party might transfer money to another account via a wire transfer for something they can’t or won’t explain. At that point you can subpoena the bank the money was transferred to and potentially figure out names of the parties involved in the transaction and whether they have any accounts at that bank. It involves a simple subpoena to the bank to ask for information or a deposition on an undisclosed account, which is very easy to do.
Hire forensic experts to take a deeper dive into more complex financial matters. Credit reports and bank statements can be very helpful when analyzing the finances of couples that spend what they earn, however, they barely scratch the surface when it comes to high-net-worth estates, especially those with sizeable business interests. If you and your attorney need to figure out how to find money hidden by spouse pertaining to a highly complex marital estate, you need to call out the big guns.
Our family business lawyers for divorce cases work closely with a variety of forensic experts who specialize in peeling back the layers of complex marital estates, family businesses and other income and assets pertaining to businesses and other financial interests. Using forensic experts who specialize in business dealings is critical, especially when you have one spouse who is very involved in the couple’s business interests, while the other is not.
It is important to remember that hiring a forensic accounting expert always comes with the inherent risk of finding out there isn’t anything that the other spouse is hiding, which means you could spend a chunk of money to get nothing in return in terms of asset division. This is why forensic accounting experts are usually reserved for high-net-worth estates where there is enough of a reward for the risk.
Lack of transparency is often the case in these situations (whether intentional or not), so it’s important to hire a divorce lawyer who has experience dealing with business concerns. They can help you take steps to get access to business records and financial accounts and also ask the court to impose restrictions on certain business activities and transactions while the divorce is pending.
Finding hidden assets can be challenging and isn’t always worth it
While I’d like to say there’s always a way to find hidden assets in divorce, it isn’t always easy or even possible. For one, transactions involving Bitcoin and certain types of financial institutions can be very difficult if not impossible to trace.
There are also some couples who run cash-based businesses, where there is non-disclosure of assets in violation of state and federal laws. A divorce attorney would be hard pressed to walk into a court and help a client get a big chunk of that pie because the money is coming from illegal activities.
Then there’s the question of is it worth it to waste money on attorney’s fees to go after hidden assets that a spouse doesn’t have the ability to compensate you for? Or is it worth it to spend $10,000 to find hidden assets that are only worth $5,000? Sometimes you need to let it go and move on because the math just doesn’t add up.
Need help finding hidden assets in Texas?
If you live in the Dallas / Fort Worth area and have questions about divorce, the division of your marital estate or finding hidden assets after divorce, the divorce attorneys at the Sisemore Law Firm are here to help. We have experience with complex property division, family businesses and finding and protecting assets.
To schedule a confidential case review with a divorce lawyer at our Fort Worth law firm, please call (817) 336-4444 or connect with us online.
