Submitted By: Gregory Wagner
CDFA® (Certified Divorce Financial Analyst) and founder of Moiety
Hiding Assets Is Not The Norm In Divorce Proceedings, But It Does Happen.
The Facts
According to a recent study by the National Endowment For Financial Education (NEFE):
- About 1/3 of adults commit some form financial infidelity: lying about assets or debt from a partner.
- More than half of those who committed financial deception, hid cash from their partner.
- 76 percent of adults said ‘financial infidelity affected their relationship.’
If assets are going to be hidden – not surprisingly, it is likely happen in a divorce situation.
Some reasons that drive this behavior can range from:
- Feelings of betrayal or anger at one spouse resulting from divorce or separation.
- The fear of not having enough cash or assets to survive after the divorce.
- Greed
- Elements of all of the above
Under Oath
In a divorce proceeding, the assets are divided between the spouses. Under the divorce laws of a few states, the assets are divided equally and in most states, the marital assets are divided “equitably” or fairly. Equitably often ends up as equally split in both in-court and collaborative divorce settlements.
During the initial divorce process, both you and your spouse will have to list income, assets and debt on a statement of net worth or a Financial Affidavit. This is a detailed document that compels the spouses to share financial information through their attorneys and to swear under oath that the information provided is true and accurate.
Lying on a financial affidavit could bring harsh penalties and even a charge of perjury.
1. Check The Signs
Even if your spouse has signed a financial affidavit, you know your spouse better than your divorce attorney will and you will need to alert your attorney to the possibility of your spouse being financially deceptive. Some common signs that might indicate your spouse is hiding assets:
- Spouse is suddenly secretive about finances.
- Spouse refuses to provide financial statements (credit card, bank statements, etc..).
- Unusual change in spousal income, profitability or expenses – particularly if your spouse owns his/her own business.
- Change in cash withdrawal activity. It is hard to track the money trail on cash, so this is a common tactic for deception.
2. Gather The Data
Try to obtain and copy as much of your spouse’s financial documentation as possible – going back several years. This includes:
- Bank statements
- Credit card statements
- W-2 and tax returns: this will often be the most important documents needed for hidden asset investigation.
You can obtain any tax document that you signed by contacting the IRS and can have your lawyer subpoena your spouse to provide documents, if the information gathering process becomes difficult.
3. Get Expert Help
If you think there is a real possibility that marital assets are being hidden, it is prudent to obtain expert help.
Unless there are glaring financial red flags, a matrimonial lawyer will not spend significant time sifting through a mountain of financial documents to determine if there is a cause for action.
Quite often, a specialist such as a Certified Divorce Financial Analyst (CDFA) will be hired either by the spouse or the spouse’s attorney as complementary support to help analyze the financial picture in a divorce. Only a small percentage of financial analysts hold a CDFA designation – who are specifically trained to assist on a number of financial aspects involving a divorce.
Taking these simple pre-emptive steps can mean the difference in obtaining a fair settlement in divorce. It will also be incredibly helpful to your divorce attorney to have as much evidence as possible, as early as possible when you have reason to believe your spouse is hiding assets.
Final Thoughts
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