You made a painful decision to end your marriage after months of therapy and emotional conversations. You’re coming to terms, emotionally, with the idea of separating, and now you need to split up your assets and debts. How can you ensure this process goes fairly? What if you’re worried that your spouse’s grip on the family finances will prevent you from getting a clear and complete picture?
Minnesota laws state that except for personal gifts, in general, all assets acquired during the marriage belong to both parties, no matter who earned them. If you suspect your spouse could be hiding assets, here are some insights to protect your rights and ensure fairness.
Discovery Helps Force Disclosure
During the discovery phase, the judge will order you and your soon-to-be ex to comply with requests for information about assets and debts. If he lies in this reporting, the court can charge him with perjury. If he refuses to provide documentation, the court can financially penalize him or rule against him on other issues.
That said, a person committed to hiding assets might beat this process. For instance, let’s say your husband opened a secret Cayman Islands bank account that forensic accounting analysis fails to detect. The court would have no way to identify and punish his actions.
Locating Hidden Assets
If your spouse used false documents or the help of a third party to hide assets, what should you do? An attorney can try the following:
• Requests for admission (a.k.a. interrogatories). These formal legal requests require your spouse to respond truthfully to questions about the locations of assets and accounts.
• Testimony. During oral deposition, your attorney can ask your spouse questions about his finances in an attempt to expose wrongdoing or clarify concerns about his employment or relationships with third parties, such as a sketchy investor or business partner.
• Documents. Your lawyer can request financial statements, account records, tax returns and loan applications.
• Inspection demands. You can request an inspection to examine the contents of private property, such as a safe deposit box.
Hiding Places for Assets
A spouse might hide diverse property, including cash, insurance policies, stocks, bonds, travelers’ checks, savings or municipal bonds, variable annuities and mutual funds. Here are some common tactics:
• Storing money and property in a safety deposit box held under an alias
• Repaying fake debts
• Transferring funds to another person or business
• Putting money into a hidden 401(k), pension or similar plan
• Creating fake custodial accounts for a child
• Delaying bonuses
• Giving a “gift” to another person, such as a family member or business partner, under the unwritten assumption that that person will re-gift the money, after the divorce has been settled
• Skimming cash from a business
• Paying money to an non-existent employee to reduce the seeming value of a business enterprise
• Intentionally getting a business valued at a lower rate
• Delaying business contracts until after a divorce is final
• Purchasing property with hidden cash
Forensic Investigation of Assets and Debts During a Divorce
An investigator will need as much personal information as possible about the person suspected of hiding assets. He or she will need names, nicknames, addresses, social security numbers, and information about family members, financial advisors and business partners.
An investigator can look for hidden assets by assessing:
• Income tax returns
• Checking and savings accounts
• Insurance statements
• Cash flow in a business
• Credit card reports and/or receipts
• Public records
• Loan applications, including personal net worth statements
• Off-shore account