Divorce is a very stressful process under the most ideal circumstances, and the pressure and fear gets so much worse if you suspect your spouse is hiding assets — in divorce negotiations, this issue often comes up.
Divorces are mentally, emotionally, and often physically draining, even when the divorce is amicable.
For many people, divorces are often financially draining, too, which can lead to the hiding of assets.
Often, important financial life events can make this situation even more stressful — the following are some examples of circumstances that can contribute to the financial pressure:
- Having young children
- Paying for college
- Getting close to retirement
For this reason, it’s important that you understand your entire financial picture.
Are They Hiding Assets During the Divorce? — Look at Income Tax Filings
While perhaps hard to believe, it’s fairly common in a divorce that one spouse doesn’t know exactly what the other spouse’s income is.
The first place to look and substantiate any suspicious claims of actual income is in your income tax filings.
Firm verification of your spouse’s reported income can often calm fears that he or she is hiding assets — in a divorce, the logical question to ask is (if they’re earning a high income): Where did all the money go?
Another reason to look at tax filings is to see if your spouse moved any money out of a 401(k) or IRA account.
If your spouse moved money from a retirement account, it may be because they’re paying off a debt — they might also be hiding money by trying to make it look like there’s much less money in the account.
If they had made these types of withdrawals, the company that the 401(k) or IRA is funded through would send a 1099-R form detailing the retirement account distributions to the IRS.
Your spouse is required by law to report these transaction in their end-of-year income tax filings under threat of some pretty stiff penalties, which means tax returns are a great place to find out if your spouse is hiding assets. In a divorce, such concrete evidence is the best way to hold your spouse accountable to the truth.
If You Think Your Spouse Is Hiding Assets (In a Divorce Situation), It’s Good Practice to Run a Credit Report Check
Another common source of stress for divorcing couples is an all-too-common situation: One spouse is running up debts in the other’s name or may be hiding debts that will later come to light and cause additional financial problems.
The divorce decree will specify who is taking which debts after the dissolution of the marriage, but it really doesn’t offer that much protection for you if your soon-to-be ex-spouse doesn’t take care of their obligations.
It’s important to understand that missing payments or late payments will show up on each of your credit reports, whether or not you knew your spouse was hiding debt.
The reality is that if you and your spouse took out a loan together or opened a credit card together, the lender may come after both of you for the repayment.
In some ugly situations, an angry or spiteful spouse can punish their soon-to-be ex-spouse by destroying their credit history — the “I’ll take you down with me” mentality.
Such vindictive and harmful behavior doesn’t happen often, but, when it does, it can be devastating — far worse, possibly, than simply hiding assets. In a divorce, information is power.
That also means, whether or not you believe your spouse is hiding debts, you need to run a credit report. Knowing exactly what debts are out there in your name may help you sleep better during this process.
Are They Hiding Assets in the Divorce? — Discovery
One tool that’s often employed in divorces is called discovery.
This is a formal legal process to get information and critical documents from the opposing side.
It’s especially useful if you believe your spouse is hiding assets — in the divorce process, your attorney can use discovery to demand documents like bank records, phone records, financial statements, etc.
They can ask detailed and invasive questions to which your spouse must give written responses and possibly give testimony.
All of these are completed under oath, where your spouse is sworn to tell the truth under risk of committing perjury.
Do You Suspect Your Spouse of Hiding Assets or Debt? — Contact Us for Help
If you believe your spouse may be hiding assets, before your divorce begins, contact the attorneys at Hayes, Berry, White & Vanzant to set up a consultation at (940) 387-3518, or contact us here.
