What Are Hidden Assets and How Do They Relate to Divorce?
Financial issues in a divorce can sometimes be difficult where unreported income and hidden assets are being alleged usually by the party who is not running the family business or has not been in charge of the family finances.
It is not unusual for a spouse to hide income and assets, especially if the divorce action has been planned well in advance. A spouse may want to hide income and assets for a variety of reasons, but in a divorce action, they have property they do not want the other spouse to know about and they do not want to share the asset with the other spouse.
Most Common Forms of Hidden Assets
The most common types of hidden assets include cash, bonds, insurance policies, mutual funds, annuities, stocks, pension funds, 401Ks and IRAs. Also, a party may convert cash into personal property such as antiques, automobiles, boats, art, jewelry or guns. These are examples of asset conversion that a spouse may often overlook or undervalue in a divorce action.
Hidden Assets Can Be Difficult To Discover
Hidden assets are typically placed with a trusted third party or behind false documents. Finding hidden assets is often one of the most difficult tasks during the divorce process and is handled in a two-step process. The first step is through the traditional formal discovery process by serving interrogatories on the opposing spouse, taking his or her deposition and issuing subpoenas to third parties such as banks. If the opposing spouse fails to produce the documents requested, the court can compel the opposing spouse to produce the requested documents, sanction them accordingly and order them to pay attorney’s fees and costs. The second step is to consider the hiring of an investigator to trace the transfer of ownership of assets into another individual’s name or other entities’ names.
Through diligent and effective preparation, it is possible to discover hidden assets not disclosed or acknowledged by the opposing spouse. Part II will focus on how assets are hidden.