What Divorcing Spouses Need to Know About Concealed Assets

 Posted on July 18,2022 in Division of Assets

During a divorce, there are a multitude of financial issues that will need to be addressed. Many of these are related to the property and assets a couple owns, as well as the debts they owe. The division of marital property can be a complicated matter, especially in high net worth divorce cases in which a couple may own multiple types of valuable property ranging from physical belongings, real estate, and vehicles to financial assets such as investments and business interests. In some cases, the process of evaluating and dividing marital assets can become more difficult due to attempts by one spouse to hide assets from the other and unfairly influence the outcome of their divorce.

Concealed assets can be a difficult matter to address during a divorce, and in many cases, a spouse may struggle to identify the different types of property they own, uncover inappropriate actions by the other party, and ensure that all assets and debts will be divided fairly and equitably. The skilled divorce lawyers of Weiss-Kunz & Oliver, LLC have represented clients in a wide variety of divorce cases, and we understand the complex factors that can influence the division of marital assets. We know how to identify assets that have been concealed and ensure that these issues will be addressed correctly. Our goal is to ensure that our clients can achieve a fair outcome to their divorces that will provide them with the financial resources they need to succeed in the future.

Reasons Why Spouses May Attempt to Hide Assets

In many cases, divorcing spouses recognize that as they separate their lives from each other, they are both entitled to equally share the property they have accumulated. However, the divorce process often involves conflict, and the breakdown of a couple’s relationship can lead to disputes about how property should be divided and whether one party is entitled to receive certain assets. These disputes can lead spouses to take actions outside of the legal process, and by concealing assets from their spouse, a person may seek to influence the outcome of their property settlement. 

Some common reasons why spouses hide assets include:

• Infidelity - If a marriage is ending because one spouse had an affair, the other spouse may believe that the cheating spouse should be penalized for their actions. The belief that the other party was to blame for the divorce may lead a person to decide that the unfaithful spouse is not entitled to an equal share of marital assets, and they may conceal money or property in an attempt to keep a larger share of the marital estate. In some cases, spouses who are unfaithful may also attempt to hide assets out of the belief that they will need additional money to provide for themselves and their new partner after their divorce.

• Disparities in income - Illinois law states that all of a couple’s marital property should be divided fairly and equitably, no matter who purchased different items or whether one spouse’s income was used to make purchases or save money. However, some spouses may believe that this is unfair. A person who earned the majority of the family’s income may feel that they were primarily responsible for accumulating the money and property the couple owns, and they may believe that they deserve a larger share of the marital estate. To avoid sharing certain assets with their spouse, they may take steps to conceal money or other items.

• Avoiding support obligations - There are some situations where a person may be unhappy about the possibility that they may be required to pay child support or spousal support to their spouse. In an attempt to minimize the amount they will pay, a person may downplay the extent of the assets they own. By hiding financial assets and concealing some of their sources of income, they may attempt to show that they do not have the resources to pay ongoing support.

• A desire to hurt the other spouse - The strong emotions that come with the breakdown of a marriage may lead spouses to take steps meant to cause financial difficulties for the other spouse. By limiting the assets that are available to divide during the divorce process, a person may hope that their spouse will get less money, causing them to struggle to support themselves after the divorce has been finalized. Spouses may also attempt to inflict emotional harm by hiding items that they know are important to the other party, such as family heirlooms or other property with sentimental value.

Regardless of the reasons why spouses may attempt to conceal assets from each other, these actions are illegal. During the discovery process, spouses are required to report all physical and financial assets they own. By fully documenting all of the marital property a couple owns, as well as any assets that are separately owned by each spouse, a couple can have a complete understanding of their marital estate and the financial resources available to each party, and they can work to negotiate agreements that will divide all of their assets fairly and equitably.

Uncovering Attempts to Hide Physical Assets

One common way spouses may try to conceal assets involves physically hiding cash or other valuable items in secret locations. Money or other valuables, such as jewelry or collectible coins or stamps, may be hidden around a couple’s home. Spouses who suspect this type of activity may want to look in potential hiding spots, such as under floorboards or mattresses, in closets, file cabinets, desks, or dresser drawers, or in crawl spaces in an attic or basement. Documenting any items found can ensure that these assets will be properly considered during the property division process.

It may also be necessary to search for items that may have been hidden in other locations. Safe deposit boxes are a common place where spouses may attempt to hide cash or other valuables. Storage facilities or the homes of friends or relatives may also be a place where a person may attempt to conceal items. This method may be used if a spouse has attempted to convert marital funds into valuable items such as artwork, with the intention of underreporting the value of these items and selling them after the divorce is complete.

Discovering Hidden Financial Assets

When a family owns extensive financial assets, the attempts to conceal these assets may sometimes seem more sophisticated, and they can be more difficult to uncover if the other spouse has not been as involved in managing financial matters. These methods may include:

• Paying false debts or expenses - A spouse may claim that they owe money to a friend or family member and make large payments to cover these debts while intending to have the person pay them back after finalizing the divorce. These transfers may also be made while claiming that they are payments for goods or services, such as repairs on a couple’s home, maintenance on a vehicle, or new appliances, and a person will plan to receive these payments back at a future date.

• Deferring income or benefits - Corporate officers or those who work in executive positions may have opportunities for delaying the receipt of income until a future date. This may allow a spouse to misreport their income by only stating the amount they expect to receive in the near future rather than all of the income they are entitled to receive. They may wait to receive bonuses, commissions, or other benefits until after completing their divorce, providing themselves with additional financial benefits without being required to share the amounts they have earned with their spouse.

• Accounts in children’s names - Some spouses may open accounts using children’s Social Security numbers, claiming that the funds in these accounts will be used for college expenses. However, they may intend to withdraw the funds for their own purposes once the divorce is finalized.

• Life insurance policies - While policies meant to provide for the needs of children or other family members following a person’s death may seem legitimate, they may be used to hide financial assets with the intent of cashing out a policy at a later date.

• Overseas accounts or trusts - When money is transferred outside of the United States, it can be difficult to track, and the other spouse may struggle to fully document the extent of these assets and ensure that they are properly considered during the divorce process. Financial experts may be able to assist in locating and evaluating foreign assets.

• Cryptocurrency - Virtual currencies such as Bitcoin are an increasingly popular way to hide assets. When marital funds are converted into cryptocurrency, tracking the status of accounts held by a spouse and the value of these assets can be difficult. Assistance from cryptocurrency experts may be needed to properly evaluate these assets and ensure that they are accounted for when dividing marital property.

Identifying Assets Concealed Through a Business

Spouses who are business owners may have a variety of different opportunities for concealing money or other assets. In many cases, a spouse can benefit by working with a forensic accountant to review a business’s financial records, uncover any irregularities, and discover whether money has been improperly transferred or concealed. A forensic accountant may perform a complete business valuation and uncover issues such as:

• Payments to nonexistent employees or vendors - One common way that money may be hidden through a business is to pay false wages or make false purchases. Even though a company’s records may show that a salary was paid to an employee or that goods or services were purchased from vendors, the money may have been funneled into a hidden account owned by the business owner's spouse or another party, such as a family member or the person they were having an affair with.

• Overpayments of taxes - A business owner may increase the amount paid by their company to the IRS or in state or local taxes. This will allow them to receive a large tax refund after the divorce is complete, and they may intend to keep this excess amount of money.

• Delaying significant business deals - Major deals, such as contracts to perform services, large sales of goods, or selling an ownership interest in a business to a larger company, may result in significant profits for the business owner. To avoid sharing these profits, a spouse may wait to complete these types of deals until after finalizing their divorce.

Contact Our Elmhurst Property Division Lawyers for Hidden Assets

At Weiss-Kunz & Oliver, LLC, we have experience in a wide variety of complex divorce cases, including those involving hidden assets, asset dissipation, and other complicated financial issues. If you are concerned about the possibility that your spouse is attempting to hide money or property, we can help you work with financial experts to uncover and address any illegal actions. We will advocate on your behalf to ensure that you will be able to divide all of your marital assets fairly so that you will have the financial resources you need and deserve going forward. To learn more about how we can help you complete your divorce successfully, contact our DuPage County asset division attorneys at 312-605-4041.

Sources:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

https://www.truthfinder.com/infomania/technology/find-hidden-assets-divorce/

https://www.huffpost.com/entry/be-smarter-8-ways-your-sp_b_9725510