How to Find Hidden Assets in a Divorce
Would you know if your spouse was hiding assets from you?
In most families, one spouse controls the finances.
As a marriage comes to an end and divorce draws near, the spouse in control can substantially increase his share of the financial pie by hiding assets from the unknowing spouse or family member.
The policy of the State of Florida, however, is to see a fair division of assets and debts.
And the only way to accomplish a fair distribution is to uncover hidden assets and put everything in the sunlight.
Therefore, Florida law gives your divorce lawyer powerful tools and weapons to unearth assets hidden by your spouse, and to ensure you receive a just result.
To find hidden marital asset in a Florida divorce you first must find, compel, and gather all relevant financial documentation related to your spouse. Then, you need to sort through the documentation to find traces of hidden marital estate or assets.
Sometimes, you find what you are looking for right under your nose.
That’s why the first place to look when you are concerned that your spouse is hiding assets is your own home.
Your spouse’s mail has been coming to your address for years. Important documents are stored in your spouse’s den or desk drawers. This should be the first step in your discovery process.
And these documents can provide valuable information that can help you secure a complete picture of your spouse’s financial portfolio.
We call this “self-help” discovery, as you can help your own cause and put your divorce lawyer in the best possible position to succeed.
The best practice is for you to gather all financial documentation that you think might be relevant in your divorce case, make copies, and return the originals.
If you are unable to find any documentation, ask your lawyer for a list of all documentation that might be relevant in your case. You can then take this list directly to your spouse and ask him or her to provide everything on the list.
One of the first things on the list, and the best place to start when your lawyer tries to uncover hidden assets, is income tax returns.
Demanding Production Of Financial Documents
In a divorce case, you are allowed to make the other party gather and disclose financial documents that are relevant to your case.
And considering your assets and debts are on the line, you can imagine that quite an array of documents are relevant.
To do it right, your divorce lawyer will request production of almost every document that might be relevant if there is concern over hidden assets.
These requests, while painfully thorough, are designed to leave no stone unturned in the discovery of hidden assets.
Everything from bank statement to retirement account statements to individual and business tax returns are asked for in this production of financial documents. Even QuickBooks files and accounting ledgers are fair game!
Of course, a spouse may simply ignore the request, or lie about the documents that exist.
Divorce courts know and expect this, and provide your divorce lawyer with additional tools to gather documentation.
Subpoena Bank Records From Any Bank
An amazingly powerful tool is the subpoena of bank records.
Your divorce attorney can directly subpoena your spouse’s bank records from any bank in the US.
And while it might be difficult and ineffective to send a subpoena to every bank in the US, you can start with banks that your spouse currently banks with or has previously banked with. It is almost comical that spouses will keep secret accounts in the same place that they regularly bank.
Subpoena Employment Records From Your Spouse’s Employer
An equally powerfully but often overlooked discovery tactic is to subpoena an employment file from your spouse’s employer.
Perhaps you are concerned that your spouse is funneling money directly from his employer to a separate bank account. By looking into the employment file, you will see all monies that have been paid by the employer.
Require Your Spouse To Complete Written Interrogatories
What if you could force your spouse to write out answers to written questions you serve him with?
And force him to do so under oath?
You can with interrogatories.
In Florida, we have certain standard interrogatories that require a spouse to answer questions about bank accounts, assets, and the like.
We also have a set number of questions that we can create and tailor to your case to elicit information.
Require Your Spouse To Answer Yes/No Questions
Likewise, we can write out “yes/no” questions that your spouse must answer under oath. We call these requests for admissions, and we can draft and serve as many as are needed.
Have Your Divorce Attorney Take Your Spouse’s Deposition Under Oath
Perhaps the most important hidden asset discovery tool is the deposition upon oral examination.
We get to force your spouse to come into our office to answer any relevant question we ask them. Under oath.
Have The Court Hold Your Spouse In Contempt Of Court If They Don’t Play Along
While these tools sound great, what do we do when a spouse thumbs his nose at your lawyer and refuses to play ball?
Go to the court for help.
If your lawyer does it right, he or she can have the Judge order the spouse to comply with the disclosure requests above. When your spouse fails to do so, your divorce lawyer will ask the court to fine your spouse for not adhering to a divorce settlement.
Or even throw him or her in jail.
Specific Documents: The Tax Return
Few people pay attention to the absolutely stunning amount of information on a complete set of tax returns.
Form 1040: US Individual Tax Return (and supporting documents)
The part of the tax return you are most familiar with is your US individual tax return. The 1040 includes information on wages, salaries, tips, and so much more.
Look for the taxable interest (Line 8a.) Interest is the compensation an individual receives for loaning money. For example, if you put money in a savings account, you are loaning the bank money. You get paid for this loan, something that is called interest.
Look for the non-taxable interest line (Line 8b): Non-taxable interest includes things like bonds issued for major projects like construction of buildings. Anything on this line suggests an asset.
Look next for ordinary dividends (Line 9.) Dividends are returns or payments a spouse receives for investing in a company. Income is derived when the company declares a dividend. To see more information, look for “Schedule B” in the return.
Finally, look for Business Income or Losses (Line 12.) To see more, look for “Schedule C” in the return.
Capital Gains and Losses (Line 13): When we talk about capital gains, we are talking about assets like stocks, bonds, buildings, or real estate.
When a spouse sells these assets, the spouse will incur a capital gain or a loss. A sold asset must be traced to find the cash received. To see more, look for a “Schedule D” associated with the tax return.
IRA Distributions (Line 15,) and Pension and Annuities (Line 16,) and Rentals, Royalties, Partnerships, S-Corporations, Trusts, etc. (Line 17.)
All of these reflect monies that are associated with assets and debts. Monies on any of these lines might suggest hidden or undisclosed assets or real estate.
A thorough review of the tax returns is a perfect start to searching for hidden or undisclosed assets. The next step is to trace through bank accounts and credit card accounts.
Tracing Bank And Credit Card Accounts
In a financial divorce, a divorce lawyer has access to three to five years (or more) of banking and credit card statements, including those in a custodial account.
Even the sneakiest spouse is likely to have left a link to a hidden account or asset in these bank and credit card statements.
We call the process of combing through bank and credit card statements “tracing.” If we find that monies have been transferred back and forth between a disclosed account and an undisclosed account, we simply go back to the court and force your spouse to turn over the undisclosed account.
We can repeat this process as many times as needed to get to the root of a problem.
While spouses are hiding assets in a divorce, they are showing everything on loan applications.
That’s because the better financial picture you show to a lender, the more likely you will receive money.
Every Request to Produce requests loan applications. These should be compelled early in every potential hidden asset case.