Divorce can be a pricey affair. If you’re currently considering one, there’s a chance that your spouse has been hiding assets. According to accounting firm Grant Thorton, about one in five couples try to hide money in the event of a divorce. About 88% of the time, the party hoarding money was the husband. How do you know if your other half has unreported income, and how can you uncover it? We outline a few ways to know, and offer suggestions of what to do about it.
1. Be on the Lookout for Potential Red Flags
Spotting a spouse trying to squirrel away assets many not be as hard as you think. If you get a whiff of wrongdoing, look through your old tax records. Ask for a 4506 form and take it to a forensic accountant. It might take a few weeks, but they should be able to give you an idea of what kind of assets you and your spouse have. Additionally, collect copies of old bank statements and investment accounts. Be on the lookout for large withdrawals or other suspicious behavior.
2. Monitor ATM Behavior
Check your current bank statement each month for ATM withdrawals. People don’t deviate from their usual patterns without reason. If your spouse is a strictly plastic kind of person, but you start to notice large cash withdrawals, take that as a sign that they may be trying to hide assets from you.
3. Request a Copy of Your Credit Report
You’re entitled to a free copy of your credit report every 12 months. Has there been any irregular activity in your joint assets? Make sure to check all three major credit bureaus for an accurate picture: not every bureau reports the same thing.
4. Consider Offbeat Possibilities
Each person conceals assets differently. You know your spouse best, so only you know how to locate them best. Has your spouse been paying off lots of old debts to family or friends? This may be one way they’re hoarding cash from view. Another possibility is starting accounts in a child’s name, citing a college fund. It sounds bad, but some people aren’t above using these seemingly legitimate excuses to stow away cash for after the divorce.
5. Business Cover-Ups
If you own a business with your spouse, it could be an easy way to cover cash flow. Look at your business accounts to determine any signals of wrongdoing. One potential area to scrutinize is write-offs – large sums may indicate that money is simply being funneled from a business to a personal account. Each legitimate write-off should have supporting documentation (i.e., an attempt to collect the debt).
6. Offshore Accounts
This is a less likely possibility, but it’s not out of the question. If your spouse travels out of the country, it’s possible that they’ve been setting extra money aside in offshore accounts. These accounts have secrecy laws that make it difficult to ascertain if and how much money your spouse is stowing away. Look at your spouse’s passport to see where they may be stowing money. If you suspect foul play based on other financial irregularities, contact a forensic accountant for advice.
If you’re considering filing for a divorce or if you are already involved in one, you’ll want to make sure that your assets are well protected and accounted for. If you suspect that your spouse is hoarding cash, other valuables, or assets, get into contact with an experienced and successful divorce professional.