Ways your spouse may be hiding assets in your divorce
Maryland is an equitable distribution state, so both spouses are required to disclose all assets and debts during a divorce, even those they believe are their separate property. However, even with these disclosures, it’s not uncommon for a spouse to hide money or assets during a divorce in an attempt to keep it for themselves.
Howard County divorce lawyer Fred Coover has decades of experience in dealing with uncooperative spouses and attorneys. He is familiar with the key indicators that someone might be concealing assets and what to do if that situation arises in your case.
If you fear that your spouse isn’t fully disclosing their finances, schedule a consultation with Mr. Coover today by contacting him online or by calling (410) 553-5042. Continue reading to learn about the signs to look for if you think assets were not disclosed during your divorce.
Signs your spouse might be concealing assets or funds
Although many people might believe that their spouse is fraudulently hiding relevant financial information for their own benefit and self-preservation, there’s usually some telltale signs that they’re engaging in such activity.
1. Cash withdrawals and purchases
A common method of hiding funds or assets stems from cash because it’s difficult to trace, but it’s not impossible. If your spouse rarely used cash or made cash withdrawals throughout most of your marriage, but upon reviewing your bank statements as part of your financial disclosures you see several unusual and out of character cash back and ATM transactions, but you never saw cash used for purchases and there weren’t cash deposits into other accounts, your spouse may be hiding money.
Cash can be used in a variety of ways to conceal an asset:
- It can be deposited into an undisclosed account or safe deposit box in their name or in the name of a friend or family member but to which they have access.
- Expensive items can be purchased, potentially with the intent to sell them later for the same amount of money or for a profit.
- Giving a friend or family member the hidden cash and asking them to “loan” it to your spouse after separation or to “gift” it to them, which would make the funds their separate property.
2. Transfers to accounts
Although cash might be the most common method of stealing marital funds, it’s not unheard of for a spouse to use a custodial account for a child to hide funds. It’s also not uncommon for them to make sporadic transfers into a separate account held at the same financial institution where you have other accounts or loans because if they’re questioned about the transaction, they can say that it’s a payment to a joint account or debt.
With several different methods of electronic payments such as Venmo, CashApp, and others, it’s now easier for people to make payments to themselves and store the funds in the app-based account or to then transfer them to a hidden account. In a divorce proceeding, you’re entitled to the transaction history from those accounts, either through written discovery or by subpoenaing the records directly from the financial institution.
3. Using credit cards and lines of credit
If you and your spouse have significant debt or if they managed the finances, you might have been unaware of any cash advances on credit cards, or if they took funds from a line of credit. The cash from these advances can then be concealed in any of the manners described above.
Similarly, intentionally overpaying on a credit card or loan may result in a check for the overage being mailed to the account holder, which they can then deposit wherever they wish, but on your bank account it simply looks like a normal credit card payment.
4. “Loans” from family and friends
As mentioned above, your spouse might convince a friend or family member to join their scheme of defrauding you by either giving that person cash to “loan” them, or by making a “payment” toward a loan they incurred during the marriage, but in reality the “lender” will give them the money after your divorce has been finalized.
If they try to argue that the loan was taken during your marriage, that debt would need to be split equitably, which will reduce the amount of the marital estate that you’ll receive. They might agree to take the “debt” knowing that it wouldn’t need to be repaid, yet you were still affected by the fictitious debt.
They can even make this claim if you were unaware that the “debt” existed, especially if they have a purported loan agreement. However, your attorney can argue against the validity of the alleged debt by using the credibility of your spouse and the alleged lender, and any proof (or lack of proof) of payments and accounting on the loan.
5. Concealing income
If your spouse owns or has an ownership interest in a business, that business is subject to the same equitable division laws as the rest of the marital estate, and their income from that business is relevant for determining child support and alimony. It’s possible that they’re hiding income in that business to reduce the business’s value and the amount of support they might owe or to increase the amount of support they might receive.
Your spouse might achieve this by:
- Not reporting cash income
- Asking more clients or customers to pay in cash so they can hide it
- Delaying invoicing until after the divorce
- Creating a fictional worker to which they can issue checks but void them after the divorce has been finalized
- Fake vendors or expenses that are reported by the business but the funds are deposited into a hidden account or that of a friend or family member for “safekeeping.”
What to do if you believe your spouse is hiding assets
Although it might seem like the methods of hiding assets are endless, the team at Coover Law Firm, LLC has seen it all and will help you uncover those assets. They might even be able to obtain a sanctions award against your spouse for their bad conduct. It will be difficult to do that alone. Mr. Coover and his team can employ several strategies to uncover this information with ease, including the following.
Your attorney can issue written discovery which will require your spouse to answer questions, produce full and complete copies of documents, or provide documents, records, and books for inspection and copying, all responded to under penalty of perjury with severe violations for violating the rules of discovery. If your spouse refuses or fails to produce legitimate responses, your attorney may ask the court to issue an order that your spouse respond to discovery and provide all requested documents based on their relevance to the case and on the suspicion that they’re concealing assets.
Deposing your spouse
A deposition is a form of discovery, but rather than being in writing, your attorney will ask your spouse questions while they’re under oath. Every word is captured by a court reporter. Your attorney can ask them questions about specific transactions, their business practice, or alleged “loans” that they disclosed in their financial disclosures or at any other time.
A deposition can be a very useful discovery tool because the information obtained during the deposition could point you in the right direction for additional discovery, and it can be used to impeach your spouse later in the case.
If your spouse is uncooperative, or to avoid any anticipated games that your spouse and their attorney might play, Mr. Coover can request your spouse’s financial records directly from the financial institution. By going straight to the bank, you’re often able to obtain more documents than what your spouse could provide, including copies of deposit slips, deposited checks, and canceled checks.
Hire a forensic accountant
Forensic accountants are often an integral part of complex divorces. As CPAs with additional forensic licensing and accreditation and familiarity with family law, they’re frequently used to calculate the value of a business, trace separate or marital property, and to help locate hidden income or assets. Mr. Coover has several trusted and reputable financial experts who will find hidden funds if there are any.
Think your spouse is hiding assets in your divorce? Call Fred Coover.
Fred Coover is a highly knowledgeable Howard County divorce lawyer with an experienced team who will help you through your complex divorce, including uncovering any hidden assets and income. Don’t ignore your suspicions–schedule your consultation today by calling Coover Law Firm, LLC at (410) 553-5042 or by contacting them online.