Divorces can become really nasty really fast, and this is exacerbated greatly when one or both partners are lying. If one person is hiding assets and their partner can prove it in court, the lying spouse is going to be facing serious consequences, including potential jail time.
How do people hide their assets?
The bad news for the partner who suspects their spouse is hiding assets in a divorce is that there are a nearly limitless number of ways to store assets unbeknownst to one’s spouse. It’s also very common. One study found that of polled joint account-holding couples, three out of five admitted to hiding some money from their spouse.
The simplest way is storing cash somewhere, it can also be the hardest to find. While finding that cash might be tricky, proving its existence is more likely by finding unexplained cash withdrawals in your or your partners individual or joint accounts, finding cash back receipts, or locating missing funds.
An equally common way to hide money is by creating bank accounts, credit card accounts, or other money processing or storage accounts online and redirecting funds there. This can be especially difficult to find if the funds are coming via direct deposit from contracts your partner has that you don’t know about or extra jobs or overtime hours you weren’t aware of.
Oftentimes, individuals hiding significant monetary or other assets from their partners don’t do it alone. They may require help from another friend or relative, even a secret boyfriend or girlfriend. Although you are not permitted to go through the mail of anyone you suspect, alerting your lawyer to your suspicions about individuals who may be assisting your spouse in hiding assets will be useful in a process we’ll discuss later on called discovery.
Although nearly anyone can hide their assets, it is much easier for a partner who does not have an employer to hide money somewhere else. This applies mostly to self-employed people, including business owners, consultants, or freelancers. However, even though some of these assets might be hidden from you, they’re not necessarily being hidden from the government via tax returns.
What can you do?
Here are the best steps you can take to identify hidden assets:
- Collect or request documents
- File inspection requests as suspected locations
- Subpoena banks where a hidden account might exist
- Issue depositions
When one party or the other in a divorce doesn’t willingly turn over important documents, attorneys will file for a discovery, which is a timeframe during which your attorney can legally request and get necessary and relevant information. What kind of documents do you need?
Important evidence that will be obtained during discovery include bank statements, pay stubs, tax returns, even invoices. When examining tax returns, check out the deductions, refunds, and declared income with scrutiny, looking for anything out of the ordinary.
If there is more you suspect is out there and you know where it might be, you can submit legal inspection requests to search things like a safe in your spouse’s house or a safe deposit box in a bank. Another way to identify possible hidden assets is by looking for cancelled checks, which may reveal a side income or secret expenses.
Subpoenas are a good way to find secret bank accounts. If you have a joint account but you believe your partner may have another one on the side, you have to know which bank that account may be at and send them a subpoena, which is a legally binding document ordering the bank to reveal any account that your partner may have there. If you’re in a small enough town, you could get a quick answer after sending subpoenas to all the banks you suspect.
If you know your partner is lying about income, expenses, the existence of assets, or their actual values, you can have them deposed. A deposition occurs when your partner must answer questions, usually on video, in front of an attorney. Lying in a deposition under oath is a crime, which although rarely prosecuted, can potentially lead to losing the case and even some jail time.
What are the consequences if the lying partner is found out?
Having a spouse lie in court might make one feel hopeless, but when the truth comes out, the legal consequences are dire.
In many cases, if a partner is found to be concealing assets in divorce court, they will be ordered to pay your and your attorney’s legal fees. They will often have their case dismissed. In some cases, depending on the judge and the vastness of their lying, the partner hiding assets may face imprisonment.
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