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Advice for divorcing spouses: Beware of hidden assets

People hiding assets tend to leave behind clues of their financial misconduct

Whether out of malice or greed, hiding assets is not an uncommon occurrence in divorce, according to Financial Advisor magazine. In order for the outcome of a divorce to be fair, it is imperative that both spouses completely disclose their financial circumstances, thus allowing a court to divide the marital property in a manner that does not inadvertently disadvantage one spouse over the other. Although people who hide assets oftentimes leave behind clues, their former spouse may not cue into these unless he or she understands how to read the indicators of such financial impropriety.

Looking out for hidden assets

Tax returns are usually the first place a person should refer to whenever he or she is worried about hidden assets. Any suspicious activity on a tax return should be noted, such as real estate or bank accounts that may not have been disclosed to the court. Loan applications can also be an important source of information as they may reveal a source of funds, such as an overseas bank account, that a spouse failed to disclose to the court.

Other behaviors should also raise red flags. Financial spreadsheets on the family computer may disappear without warning or the computer may suffer an unexplainable "meltdown." Passwords to joint online bank accounts may be unilaterally changed. For divorcing spouses who no longer live with one another, social media activity can also reveal telling information. For example, if a former spouse's best friend posts a picture of his brand new yacht that looks suspiciously similar to the former spouse's yacht, there is a good chance that the friend is holding the yacht for the former spouse until the divorce is finalized.

Offenders risk it all

The reasons for hiding assets are usually either because people are hoping for a more favorable divorce outcome or they are trying to retaliate against an ex-spouse. Regardless as to the reasoning behind hiding assets, the court nevertheless frowns upon financial misconduct upon its exposure and takes these matters seriously.

In a case in California, for example, a wife who won $1.3 million in the lottery just 11 days prior to filing for divorce tried to conceal her winnings from both her husband and the court, according to Forbes. Had she been honest about her winnings, the ex-husband would have been entitled to half of them. However, once the judge found out that the ex-wife had lied, he awarded the husband the full $1.3 million in winnings. While this is an extreme example of a court punishing the offending spouse, there are many other satisfactory outcomes to make the innocent spouse whole, such as awards of conduct based attorney fees.

Uncovering hidden assets

If a person going through a divorce suspects a former spouse has hidden assets, it is best to address these concerns with a qualified professional. An experienced family law attorney can help such spouses who fear they have been the victims of financial deceit uncover any hidden assets that may otherwise result in an inequitable division of the marital estate.

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