Ways that People Hide Money in Divorce
Hiding assets or income in a California divorce is illegal. You should not do anything illegal. There are significant penalties for this conduct.
Despite the huge risk, some people are tempted to hide assets or income. They think they’re outsmarting the system. No matter how shrewd you think you are, if you try this, you’ll most likely be found out. If your spouse has a lawyer, they’ve probably been through this before and know where to look.
If you are found to have been untruthful about your assets or income them from your ex, it will destroy your credibility in court and give the other party an advantage. It can also cause the cost of your case to skyrocket. The less the parties can agree on, and the more formal investigation is needed, the higher the cost of the case for both parties.
Do you think your ex is hiding assets or income? Here are some common ways that people try to outsmart the system. Antennas up!
Leading up to divorce, one party will sometimes start making cash withdrawals in varying amounts from different accounts, hoping that the other party won’t notice. They may ask for “cash back” on purchases or buy gift cards. This makes the withdrawals appear like a typical transaction. They might open a new secret account to deposit these funds. More often, either they will hoard this cash and conveniently “forget” they have it, or use this to pay certain expenses, like luxury hotels or meals in cases involving infidelity.
Note that in a divorce, each party has a right to see each other’s banking, credit card, and living expense records. These can be obtained directly from third party institutions and companies if needed.
Removing Items from Safe Deposit Boxes
Many couples maintain safe deposit boxes to store important documents, like property deeds, birth certificates, and passports. Couples often also store expensive valuables, like jewelry, or even cash. A recalcitrant ex might take important documents to try to limit your access to information. Further, they might take expensive jewelry and cash.
Note that in a divorce, each party has a right to see the records relating to a marital safe deposit box. Further, best practice (for multiple reasons – divorce or not), is to keep a detailed inventory of what you store in any safe deposit box you have, so you’re prepared. An inventory is something you’d rather have and not need, than need and not have.
Hiding or Deferring Income
Attempting to hide or defer income is most common with self-employed spouses. Because they have control over their compensation, they may be tempted play games with their record keeping and deductions to artificially deflate their income.
But this issue is not just limited to self-employed people. A W-2 employee might request that their employer defer salary increases or bonuses during a divorce. If they get a promotion or a pay raise, they might split their deposit into two different accounts in order to hide the increased amount.
Note that in a divorce, each party has the right to see business records and employment records. These records can be obtained directly from financial institutions, employers, and third-party professionals like CPAs. This includes business and personal bank records, pay stubs, employment contracts, and more.
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