Has Your Spouse Hidden Assets?

Are you financially aware of your family's assets and finances? Do you keep track of your accounts and credit card statements? Does what you spend and save correspond to the income you have coming in?

If a divorce is on the horizon for you, the best gift you can give yourself is to be familiar with your finances. Probably your major concern is how can you afford to live if you do divorce or how will your family survive after a divorce has happened. If you don't know where to begin, see a lawyer and a financial advisor who has divorce financial planning experience. Then become familiar with your family's financial picture. These professionals will help you.

I most often hear the allegation that my client suspects hidden assets when he/she is not aware of family finances. Many times assets are not being hidden. The spouse just doesn't understand the family financial picture. However, sometimes the client's suspicions are well founded.

What are the signs you should be looking for?

  1. Has your spouse been very secretive about finances during the marriage?
  2. Has your spouse taken the position that he has earned the money and it is his?
  3. Do the financial statements get sent to his/her office instead of the home?
  4. Does your spouse have the accounts in just his/her name and insist that you should not open the statements when they arrive in the mail?
  5. Are the financial passwords kept from you?
  6. Do you have access to your income tax returns? Are you part of the preparation process? Do you have a chance to review the returns before they are filed? Has your spouse or you hidden income from the IRS in the past? If either of you own your own business, have you claimed personal expenses as business expenses? Is the business largely a cash business, such as a restaurant or bar?
  7. Has your spouse applied your tax refund toward the next tax year's obligation? Is this your common practice or is this new behavior?
  8. Has your spouse increased his/her withholdings so he/she can receive a large refund next year when the divorce is completed?
  9. Does your spouse derive pleasure from cheating others?
  10. Has your spouse opened new accounts in just her/his name?
  11. Does your spouse make larger cash withdrawals or retain more of his/her paycheck? They could be putting the money in a hidden account, or just retain the cash.
  12. Does your spouse engage in off-shore investments? You may check your spouse's passport and take note of whether he or she has traveled to some countries where holding foreign money is common. Your financial advisor will probably know where those are and the ramifications of doing so. The penalties are severe.

In equitable distribution states such as Michigan, generally a client is entitled to receive roughly half of the assets and debts that the parties accumulated during the marriage. If you don't know what those assets are, you may lose the opportunity to share in them. The best defense against your spouse hiding assets is being proactive in your family's finances. Know what you own. Know what you owe and why. If possible, start with discussing your concerns about not "being in the loop" regarding family finances with your spouse. Point out that should anything happen to him/her, you need to know these things to protect the family. Your spouse's reaction to your request will be very telling in whether there are hidden assets. Remember that you have a right to know what marital assets/debts you have. Don't allow your spouse to convince you otherwise.

When you meet with your attorney and/or financial professional, have copies of your statements. If your spouse is secretive or possessive about these documents, you may need to obtain the copies over time. Even if you find old account statements, make copies of them. They may lead to current accounts. As you make the copies, arrange to store them somewhere outside the home. Do not put store them in your car. Ask a relative or friend to store them for you until you can meet with your attorney.

Financial advisors, estate planner and divorce lawyers will tell you that both clients should be active in managing family finances. It's not just to protect you in case of divorce. However, in cases where spouses are planning for their future or their families' future, such as when they engage in financial planning or estate planning, the couple is working together and the chances of full disclosure are far greater than when the couple is at odds with each other during a divorce. Your best defense against missing hidden assets is awareness of what you have accumulated.