Common Methods of Hiding Assets in a Divorce

The process of hiding assets in the event of an upcoming divorce or a current divorce is all too often commonplace in today’s world. In many cases where a divorce is imminent, high net worth individuals are tempted to hide assets from their partner in an attempt to conceal and safeguard their wealth. Whether they are hiding or transferring assets, being hyperaware of this potential financial infidelity is crucial for someone going through a divorce. To be perfectly clear, hiding assets is absolutely illegal and unethical, as all divorcing couples are required to disclose assets of all kinds – from income to expenses to debt. As such, failing to do so carries sizable consequences and repercussions for the divorcing spouse making an effort to hide assets.

With the goal of preventing the other spouse from getting their fair settlement, some of the most common methods of hiding assets in a divorce include:

• Overstating debts
• Reporting higher expenses than their real expenses
• Reporting lower income than their actual income
• Understating or hiding various marital property
• Transferring assets from a joint account to an individual account
• Giving property or cash to friends or other family members
• Delaying receiving expected payments
• Utilizing a secret bank deposit box
• Destroying property
• Overpaying the IRS
• Falsifying transactions
• Suddenly setting up a life insurance policy
• Falsely categorizing personal expenses as business expenses
• Using shell corporations
• Exaggerating or faking business expenses
• Letting friends or other family members borrow money

While the above list represents the most commonly seen methods of hiding assets, there are a myriad of additional ways to do so. A recent survey conducted by the National Endowment for Financial Education (NEFE) revealed that 3 in 10 adults with combined finances have hidden purchases or assets from their partner. In addition, the study found that more than 7.2 million Americans have hidden account information from their partner or spouse. With continually rising divorce rates, being extremely mindful of your financial situation is more important than ever before, even in the happiest of marriages.

At Ellrich, Neal, Smith & Stohlman, P.A., our firm’s litigation services department provides professional services to participants in the legal process. These services include forensic accounting, fraud detection and prevention, assistance with discovery matters, consultation, and expert witness testimony. We provide litigation services in both federal and state courts in a wide variety of cases including brokerage fraud, shareholder disputes, class action litigation, personal injury, marital dissolution, contract claims, business damages, lost profits, business and contract disputes and criminal cases.