Disclosing financial assets is a part of the divorce process. Unfortunately, it isn’t uncommon for people to withhold assets from their eventual ex-spouse.
Unsure of how to spot the signs of this or how to use the process to your advantage?
Read on to:
Know where assets can be hidden, from businesses to heirlooms;
What to ask for if you suspect your spouse is hiding assets; And
The Discovery Process: what it entails and how a lawyer can help.
In some cases, it is entirely possible that a spouse mistakenly did not report assets. Specific ways of hiding assets are more common than you would expect. Regardless of intent, knowing how a person could disguise and undervalue assets is critical when entering the Divorce process.
If you notice your spouse is undervaluing their assets or income during the divorce process, they may be attempting to hide their assets.
There are many ways a person could hide assets through everyday financial avenues. Here are a few examples:
Creating a custodial account under a child’s name using the child’s Social Security Number: this could be a sign of your spouse attempting to hide money in an account, not under their name.
A spouse kept investments in Savings Bonds or other municipal bonds that give the holder the option to defer reporting interest on tax forms until cashed or at maturity.
Your spouse suddenly pays a debt to a friend out of the blue or pays expenses for a new partner in the form of a gift, travel costs, or rent.
The undervaluing of tangible assets, like heirlooms, collections, equipment, or antiques, hides the actual worth.
If your spouse owns a business, you’ll want to be wary of the following: salary payments to nonexistent people, business expenses paid to family, friends, or partners, and attempts to undervalue a business by putting off deals or money-making moves. In addition, cases of a spouse hiding assets are prevalent in divorces where one or both spouses own a business.
Asking for the Right Things
Divorces distinguish between property types. They also pay attention to all kinds of assets when considering the property—for example, granting the ability to inspect tangible assets during Discovery like heirlooms, collections, vehicles, or property. Still, you can request to view intangible property: forms, documents, pay stubs, or agreements.
Maryland’s rules regarding requests do not set a limit on how many documents you may request. They do, however, dictate the scope of discovery (more on this process to come).
Keeping this in mind, be sure to request and obtain the following (if applicable):
Tax Return-related information (Form 1040 for income, interest, and dividend, and retirement plans distributions, along with any past refunds or deductions)
Loan statements and applications
Retirement plan and insurance policy documents
Pension, stock option, and military benefit statements
Business financial and income statements
Canceled checks, wire transfer documents
Anything related to debts and liabilities
Brokerage account and mutual fund statements
In some instances, financial advisors and family lawyers will use the term “out-spouse” to refer to the spouse who was not responsible for the economic decisions and information in the marriage. If you are the out-spouse, you may not have direct access to the necessary records to complete a full financial picture of assets. Therefore, it is crucial to request your spouse send copies of all financial records. If your spouse refuses to hand over any documents, contact an experienced attorney; they can help you find hidden assets ahead of the Discovery process and compel your spouse to cooperate.
The Discovery Process
Discovery is a pre-trial phase of the divorce process where both parties can gather information from both sides to prove their cases. During this phase, you should pursue inquiries relating to any of the above-mentioned hidden asset claims. Though the rules of discovery can differ between courts (district and circuit), you can expect to face the following during the process:
Requests for Production: Your attorney can ask your spouse to give them access to documents about property distribution. This request is a crucial step happening before deposition so that your lawyer can ask questions about the documents on the record. This can also include inspection, which involves you asking your spouse to permit your entry on their land or property along with the examination of tangible items.
Interrogatories: Your attorney can send your spouse “interrogatories” or written questions to obtain information. There are limits on the number of interrogatories that may be sent and response deadlines varying by the type of court.
Deposition: During the deposition, individuals provide testimony under oath regarding the matter at hand. Often, each party’s attorneys and the deponent – the testifying individual – meet before a court reporter. From there, both parties have the opportunity to ask the deponent questions.
Hire a good, experienced lawyer if you’re struggling with the divorce process. They can help break down the steps, retrieve the proper documents to build your case, and set you up to have the best chances of winning.