Thursday, May 5, 2011

Legal Tip: Discovering Hidden Assets in a Divorce

Discovering Hidden Assets in a Divorce

The emotional stress accompanying divorce often overshadows the vital importance of creating a sustainable financial situation that will affect you long after the emotional scars have healed. Although it may not be pleasant, getting a handle on your money and finances is the most important step to protecting yourself in a divorce.

The first step, according to Charlottesville divorce and family law attorneys, is to identify all assets and debts that should be included in the marital estate. Unfortunately, once a divorce is initiated, some spouses will do whatever they can to hide what they feel is their own money. Some spouses maintain hidden bank accounts or other secret financial activities throughout an entire marriage. If these actions are not discovered, one spouse is certain to obtain an unfair settlement.
Tax returns are a good place to start. Go back at least 5 years to look for any inconsistencies in income, the presence of trusts, partnerships or real estate holdings. If your husband or wife is a business owner, corporate or partnership returns may show a change in salary, charging personal expenses to the company, or excessive retained earnings. Tax returns can also reveal hidden bank accounts when automatic deposits to and from a bank account are indicated on the return that don’t match your customary account. 

Checking account statements for the past few years might reveal information you never knew about that could make a substantial difference in total assets to be divided. Examine statements for payments you don't recognize and for transfers to unfamiliar bank accounts. Match paystubs with actual deposits made into the account to determine if all income is accounted for, and if any funds are being diverted. As a joint account holder, you can request online access to checking and savings accounts or get copies of prior bank statements to research these issues. 

Credit card accounts may show hidden debt that can have an impact on the divorce settlement. Unusual spending patterns may reveal an affair or other spending that does not benefit the marriage. 

Joint credit reports obtained for recent loan applications may reveal hidden credit card accounts, assets or debts of which you were unaware. Examine loan applications show income, assets and debt. Obtain a copy of your own credit report as a start. 

Brokerage statements track the purchase and sale of securities. If securities are sold and the proceeds are not accounted for, you can be sure that the assets are out there somewhere. Additionally, large deposits may indicate money coming in from an unknown source. 

Children's bank accounts could be opened as a custodial account with the intent of hiding assets. In some cases, interest is not reported as income on tax returns, and no return is filed for the children. 
Knowing your assets and debts may help you avoid being a victim of an unfair settlement by a lying or dishonest spouse.   

Please contact us if you have questions or need legal assistance.

Firm Partner
Laura Blair Butler
Tucker Griffin Barnes P.C.
Charlottesville, Virginia

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