Many people going through a divorce may be unaware of hidden assets. There are a number of means that can be employed to locate assets that one spouse has kept secreted from the other. Whether it is a simple review of statements or pay stubs, or a more aggressive means requiring subpoenas and depositions, undeclared assets can be found.
- review pay stubs and bank statements to find assets
- subpoena cancelled checks
- review the tax returns
- issue a subpoena to the spouse’s employer for documents
- depose your spouse
- solely rely on your spouse’s financial affidavit and mandatory disclosure
- overlook conducting a search on the property tax appraiser website
- leave it up to your spouse to disclose his/her interest and dividends
- be naïve if your spouse’s or family expenses don’t seem to add up
- forget to carefully review the bank statements and cancelled checks
Review the pay stubs and other backup documentation for your spouse’s income, and review the bank statements that were produced to make sure that all of the income can be traced to a financial account deposit. If your spouse’s after tax income is $20,000 per month and there are only deposits of $7,500 per month, there may be an undisclosed bank account in which income was deposited.
It’s a good idea to subpoena the cancelled checks and other backup documentation for the payment of the various bills such as credit cards, mortgage payments, utilities payments and car payments. If these bills are not being paid out of the bank accounts which were disclosed, there may be other undisclosed assets that are being utilized to pay these bills. This may provide insight into other undisclosed assets.
Make sure to look at the tax returns and 1099s to ensure that all of the bank accounts in which interest is being reported on the tax return and 1099s have been disclosed.
There may be a deferred compensation plan, stock options or expense reimbursements that were not disclosed by the spouse. A subpoena to the spouse’s employer will ensure that all employee benefits are disclosed.
Go for it! Your spouse will be under oath and can face court sanctions for lying. This is the time to ask questions. For example, if your spouse just disclosed one bank account and after review of the cancelled checks and bank statements it is determined that the car payments, utilities and other monthly bills are not being paid out of this account, then your spouse will have to explain under oath what account he or she is using to pay these bills.
Now is the time to dig deeper. You cannot rely solely on your spouse’s financial affidavit and mandatory disclosure. The most important step is conducting additional discovery and research into whether or not your spouse is disclosing all of their assets and income.
Review the bank records and credit card statements for payments for property taxes, insurance, utilities, or other expenses to see if these payments are being made on a property other than a marital home. If you do a search with your spouse’s name, you may find that he or she owns property that they have not disclosed.
Request and review the Schedule B of your spouse’s 1040 and the 1099s. Interest and dividends are two commonly withheld assets that you should absolutely be aware of.
If either of these expenses exceeds the income that’s reported, then there may be undisclosed cash. Review the bank statements, brokerage statements and retirement statements to see if the expenses that exceed the reported income have been paid through savings. If savings have not been used to fund the deficit, then there is most likely undisclosed income or cash.
See which expenses have been customarily paid through the bank accounts and which expenses have not. For those that are not paid through the bank accounts, subpoena the backup documentation from the vendor if possible.
Divorcing couples must know where all the assets are. Neither side has the right to hide money and every right to use all the means necessary to discover where the assets are and what their value is. Do you research and you may find more than you expected.