Hiding money or assets can be tempting for a spouse, mainly if they traditionally handle many or all of the financial decisions. Who is going to notice? Typical actions include opening an offshore account or stashing cash in a safe deposit box. Some will open retirement accounts without their spouse’s knowledge. Those with large bonuses or payouts may try to defer it until after the divorce is final. And one CPA tried to overpay their taxes, knowing that the IRS would eventually refund the extra money.
Many spouses have no idea this happens, while others suspect something is wrong. Even when the split is amicable, it is still good to work with an attorney to ensure that all assets, debts and property are documented. They have experience in these matters and can often recognize different strategies for hiding assets.
Looking for the signs
Suspicious actions come in many forms, but common strategies for detecting them include:
- Checking the tax returns: The family’s Form W-2 includes how much a spouse earns, payments to any work plans as well as other withholdings.
- Checking the pay stubs: This shows how much is earmarked for retirement accounts or health savings accounts.
- Looking for other businesses: Some spouses have an entrepreneurial spirit, which is excellent. But there may be new or secret business endeavors used to earn income or become places to park money.
- Changing spending habits: It is generally a red flag if a spouse arbitrarily announces that the family should change how it pays for things – switching to a cash allowance may be an effort to shield a spouse from seeing bills.
- Transferring money: Some regularly move money between business, brokerage and personal accounts, but spouses should note changes in this behavior.
It starts with paying attention
Perhaps one spouse has a mind for numbers or is more detail-oriented, so they naturally assumed control of the family’s finances. Nevertheless, it is still a good idea to have a general understanding of where the money comes from and where it goes. Tax season is a natural time to show an interest.
If the numbers do not add up, it may make sense for those filing for divorce to speak with a family law attorney with experience handling complicated estates or couples with businesses. If need be, they can even work with forensic accountants and other financial experts to account for all assets.