Finding Hidden Income and Assets
In family law cases, full and honest financial disclosure is not just a good practice; it is legally required. Each party must provide a complete picture of their finances, including income, assets, liabilities, and expenses.
Failing to do so can result in serious repercussions, including court sanctions. Not only is it vital for equitable distribution of property and accurate spousal support calculations, but it also aids in establishing trust between parties during what can often be a contentious process.
Whether for equitable distribution or spousal support, understanding the full financial picture is crucial. Unfortunately, some individuals may try to conceal their true financial status to gain an advantage in negotiations. I am here to help you understand how to identify and address hidden income and assets, fighting so that you receive a fair outcome.
Reasons for Concealing Assets
There are various reasons why one might attempt to hide income or assets during a divorce. Some common motivations include:
Financial gain: A spouse may believe that if they underreport their income or value of assets, they can negotiate a more favourable settlement or keep more wealth in their possession.
Avoiding obligations: Concealing assets might be an attempt to lessen the financial obligations, such as alimony or child support.
Fear of legal repercussions: A spouse may be afraid of legal consequences tied to asset ownership, particularly if those assets are not entirely theirs, such as those acquired before marriage or from inheritance.
Understanding these motivations can help the other party and their attorney take proactive measures to uncover these concealed finances.
Conducting a Thorough Financial Investigation
To locate hidden income and assets, a detailed financial investigation is often necessary. Here are some strategies that can be effective in the search for undisclosed financial assets:
1. Review Financial Documents
Start by collecting all pertinent financial documents from both parties. Key documents to review include:
Tax returns for the last several years
Bank statements
Pay stubs and employment records
Insurance policies
Loan applications
Real estate deeds and mortgage statements
Investment account statements
By analyzing these documents, discrepancies can sometimes surface—such as unexplained income increases or inconsistent asset declarations.
2. Utilizing Forensic Accounting
In more complex cases, involving hidden assets or substantial wealth, hiring a forensic accountant may be necessary. These professionals specialize in investigating financial activities, employing accounting skills to detect discrepancies and anomalies in financial records. They can trace hidden income sources, assess the true value of assets, and detect any fraudulent activity.
3. Discovery Process
Engaging in the discovery process is vital during divorce proceedings. This legal procedure allows one party to request information and documents from the other, significantly expanding the investigation's scope.
Methods may include:
Interrogatories: Asking detailed written questions that must be answered under oath.
Requests for production: Demanding access to specific documents or records directly related to financial assets.
Depositions: Conducting interviews under oath where one party can ask questions directly to the other, potentially uncovering inconsistencies or hidden information.
Spotting Red Flags
Certain signs may indicate that a spouse is intentionally hiding assets. Being vigilant and recognizing these red flags can help during your investigation:
1. Unexplained Wealth
If a spouse suddenly acquires a significant sum of money or shiny assets during or leading up to divorce proceedings, it warrants further investigation to ascertain the source.
2. Change in Spending Habits
Dramatic shifts in spending patterns may signal concealed income. Observe any unusual cash transactions or spending that appear inconsistent with the declared financial situation.
3. Unusual Transfers or Gifts
Watch for significant transfers to third parties, especially those who might have a motive to assist in hiding assets, like family members or friends. Gifts of significant value made shortly before filing for divorce can also be a sign of asset concealment.
4. Multiple Bank Accounts
If your spouse has multiple bank accounts, especially if some accounts are unreported, it is wise to investigate the activity within those accounts. This can often require requesting bank records directly from financial institutions where the accounts are held. Make sure that everything you do is within your rights, so that you don't face criminal charges.
Legal Recourse for Asset Concealment
If you believe your spouse is hiding income or assets, there are legal steps to take. Consulting with an experienced family law attorney is invaluable as they can provide guidance tailored to your specific case complexity.
1. File a Motion to Compel Disclosure
If your spouse fails to provide the necessary financial information, you can file a motion with the court to compel them to disclose these assets. Courts take non-disclosure seriously and can impose penalties on parties who fail to comply with financial disclosure requirements.
2. Seek a Court Order for Asset Valuation
In certain cases, you may request a court order mandating a specific asset valuation, particularly for significant shared assets like business interests or properties. This ensures a fair approach to evaluating the true worth of disputed assets.
3. Contempt of Court
If it is established that a spouse has intentionally withheld financial information and misled the courts, it may be possible to file for contempt of court. The consequences of such actions can be severe, including financial penalties, or in extreme cases, jail time.
Protect Your Assets, Today
Finding hidden income and assets during divorce proceedings can be a daunting challenge, but it is crucial for ensuring an equitable outcome. By conducting a thorough investigation, being aware of red flags, and seeking professional legal support, you can protect your financial interests during this difficult time.
At Duncan and Nobles LLC—serving Rock Hill, South Carolina, and the surrounding areas throughout Chester County and Lancaster County—we are committed to advocating for your rights and strive to ensure that all assets are fairly accounted for in the divorce process.
Reach out today for a consultation to discuss your specific needs and concerns and see how our attorneys can help.