Are Assets Being Hidden?
Divorce can be one of the most challenging experiences in life, especially when significant assets are involved. During divorce proceedings, there’s often the potential for disputes over property division, financial assets, and alimony.
In some cases, one spouse might attempt to hide assets to avoid splitting them with their soon-to-be ex-spouse. This is illegal and can lead to severe legal consequences, including contempt of court, sanctions, and potentially unfavorable rulings.
In Georgia, the equitable division of property is the standard in divorce, meaning that assets will be divided fairly, but not necessarily equally. It’s crucial that both spouses are transparent about their financial holdings, but sometimes individuals go to great lengths to conceal wealth, income, or property to influence the outcome of the division.
As Georgia divorce lawyers we wanted to write an in-depth article exploring 50 common ways people hide assets in a divorce proceeding and offer strategies on how to uncover them.
- Underreporting Income
One of the most common tactics is underreporting income, whether through personal income or business earnings. Individuals may hide their true earnings by claiming a lower income to reduce the amount of money available for division.
How to uncover it: Scrutinize tax returns, pay stubs, bank statements, and financial statements. Forensic accountants can help investigate inconsistencies or discrepancies.
2. Shifting Income to Family Members
Some spouses transfer income to family members, such as parents or siblings, in an effort to keep assets out of the marital estate. This is often done through informal loans or gifts.
How to uncover it: Look for unusual gifts or loans to family members in the financial records. Inconsistencies in bank transactions or reports from family members can be useful in revealing hidden income.
3. Inflating Business Expenses
If one spouse owns a business, they might inflate business expenses to lower the business’s profits, reducing the marital estate’s value. By overreporting costs, they may decrease the overall value of the company.
How to uncover it: Carefully examine the business’s financial statements, especially any expenses that seem out of line with industry standards. Working with a forensic accountant to analyze these records can help uncover inflated or fictitious expenses.
4. Creating Fake Debts
To offset assets, some individuals may create fake debts, claiming that they owe money to family members, friends, or third parties, which reduces the value of the marital estate.
How to uncover it: Scrutinize any loan agreements or debts that seem suspicious. Asking for proof of the debt, such as contracts, correspondence, and payment records, can help uncover whether they are real or fabricated.
5. Transferring Assets to Offshore Accounts
Moving assets to foreign bank accounts or offshore investment vehicles is another tactic used to hide wealth. Offshore accounts are harder to trace and may remain outside of the reach of divorce courts.
How to uncover it: Look for overseas transactions, unexplained wire transfers, or unusual accounts. International tax experts and forensic accountants can be instrumental in tracking down offshore accounts and hidden assets.
6. Gifting Assets Before the Divorce
Some individuals may give away valuable items like jewelry, art, or real estate to avoid having to share them with their spouse. These gifts may be given to friends, family, or acquaintances.
How to uncover it: Conduct thorough interviews with family and friends who may have received gifts, and carefully check asset lists and appraisal records to determine the fair value of missing property.
7. Hiding Cash
A person might hide large sums of cash, either in safes, safety deposit boxes, or secret locations. This can be one of the easiest ways to hide assets, as cash doesn’t need to be recorded in the same way as other assets.
How to uncover it: Bank records and credit card statements often offer insight into any large withdrawals or unusual transactions. Spouses should also monitor any changes in lifestyle or spending patterns that may indicate hidden funds.
8. Purchasing Non-Titled Property
People might buy valuable items such as jewelry, antiques, or collectibles that don’t require titles or formal documentation. These assets can be hard to trace and harder to include in property division.
How to uncover it: Itemized lists of valuable personal property, like collections or jewelry, should be created. Having an expert appraiser look at these items may help assess their true value and confirm their existence.
9. Investing in Cryptocurrencies
Cryptocurrency is becoming an increasingly popular way to hide assets due to its decentralized nature and difficulty in tracking. Spouses may purchase cryptocurrencies like Bitcoin, Ethereum, or other altcoins without disclosing them.
How to uncover it: Monitor unusual transactions or large transfers that might point to cryptocurrency investments. Forensic accountants and technology experts can trace blockchain transactions and uncover hidden digital assets.
10. Falsifying Property Transfers
Some spouses might falsify property transfers, claiming they have sold property to a third party or that the property has been given away as a gift. These actions can be hard to detect without the right investigation.
How to uncover it: Examine deed records, bank transactions, and other documents related to the transfer of property. You can also request a sworn affidavit from the spouse and witnesses to determine if a sale actually occurred.
11. Undervaluing Assets
One common strategy is to undervalue property, vehicles, and assets in an attempt to keep more for themselves. For example, an individual may claim that an expensive vehicle is worth much less than it truly is.
How to uncover it: Hire independent appraisers and asset evaluators to determine the fair market value of significant assets. These professionals will help ensure that assets aren’t being undervalued for the purposes of asset concealment.
12. Delaying or Accelerating Income
By delaying receiving a bonus or accelerating the sale of an asset, a spouse can try to manipulate when their income will be counted for the divorce proceedings.
How to uncover it: Carefully check pay stubs and bank statements for any income that is delayed or received early. You may also ask about the timing of income and asset transactions during depositions or interviews.
13. Opening Hidden Bank Accounts
A spouse might open hidden bank accounts under different names to keep money away from the divorce process. These accounts may not show up in the financial disclosures provided by the other party.
How to uncover it: Review all bank records, credit card statements, and any shared accounts. A forensic accountant can investigate discrepancies and trace any hidden accounts that are not disclosed.
14. Transferring Assets to Trusts
Some individuals transfer assets into trusts, which can be difficult for a spouse to access or include in divorce proceedings. Trusts may be set up to appear as though the assets belong to someone else, making them challenging to divide.
How to uncover it: Investigate any trust documents or estate plans that may have been created during the marriage. A family law attorney can help uncover hidden trusts and assess their impact on asset division.
15. Creating Fake Loans
Some individuals create fake loan agreements, lending assets to friends, family, or even the business. These loans may be fabricated to reduce the amount of available marital assets.
How to uncover it: Examine the terms and conditions of the loan, and look for any inconsistencies in the amounts, repayment terms, or involved parties. If necessary, subpoena records from the individual or business involved in the alleged loan.
16. Changing Property Ownership
A spouse may transfer property to joint ownership with a third party or to another individual entirely, in an attempt to remove it from the marital estate.
How to uncover it: Look through deed records and title documents to check if ownership has changed. Financial records and testimony from the spouse can also reveal hidden changes in property ownership.
17. Hiding Vehicles
Some spouses may attempt to hide vehicles, moving them to a different location or transferring ownership to a third party. This tactic makes it difficult to divide valuable assets like cars, trucks, or boats.
How to uncover it: Search for the vehicle’s title and registration. Verify whether the vehicle is listed on insurance policies and cross-check with past car payments or vehicle loans.
18. Concealing Personal Property
Valuable personal property such as antiques, collectibles, artwork, or heirlooms can be hidden to prevent them from being included in the divorce settlement.
How to uncover it: Carefully catalog all significant assets and work with experts to assess the value of personal property. Regularly monitor any sale or trade of these items during the divorce proceedings.
19. Moving Assets to Business Accounts
Transferring personal assets into business accounts can make them harder to track, as they may not appear in personal financial records. Business assets may be treated differently in property division.
How to uncover it: Carefully review business and personal accounts to identify any assets that have been transferred into the business. Work with a forensic accountant to trace these funds.
20. Manipulating Loan Terms
A spouse might manipulate the terms of a loan by falsely reporting interest rates or repayment schedules, which can reduce the overall value of their assets.
How to uncover it: Verify loan documents, interest rates, and payments through bank statements or lender correspondence. Independent audits may be necessary to reveal manipulated loan terms.
21. Selling Property to Friends or Relatives
Sometimes, a spouse may sell property like real estate, art, or vehicles to friends or relatives for less than its market value to hide it. This tactic is particularly common when the spouse believes that the asset will be returned to them after the divorce.
How to uncover it: Request documentation of any property sales or transactions, including the sale price and the identity of the purchaser. If the property has been transferred at below-market value, the court may find this suspicious. Consider interviewing friends or relatives who may have been involved in the sale to understand the transaction further.
22. Changing Ownership of Retirement Accounts
A spouse may change the beneficiary or transfer assets out of a retirement account, such as a 401(k) or IRA, to prevent these funds from being included in the divorce. The spouse may also take a loan against the account to deplete the funds, making it seem like they have less to divide.
How to uncover it: Track changes to the beneficiary designations on retirement accounts. If a loan was taken from the account, review the statements for early withdrawals. A financial advisor or forensic accountant can help detect hidden transactions related to retirement funds.
23. Establishing False Debts with the Business
When one spouse owns a business, they may create false debts owed to a third party or themselves. These fake debts reduce the apparent value of the business and lower the amount of equity available for division in the divorce.
How to uncover it: Scrutinize the business’s financial statements, looking for any loans or debts that seem out of place. Ask for detailed documentation and investigate the legitimacy of these loans. Forensic accountants can help trace fake debts and identify hidden assets in business financials.
24. Transferring Assets via Sale to a Third Party
In some cases, a spouse might sell valuable assets (such as jewelry, vehicles, or real estate) to a third party under the guise of legitimate sales. After the divorce, the spouse may claim that the asset is no longer available.
How to uncover it: Examine any recent asset sales, including records of the buyer and the sale price. Forensic investigators can help track down the third party involved in the transaction and verify the legitimacy of the sale. Be sure to examine whether the sale price is significantly lower than market value.
25. Hiding Real Estate
Real estate properties can be hidden by transferring ownership to another person (often a relative or close friend), or by claiming the property is a rental when it is actually the primary residence.
How to uncover it: Review public property records and tax assessments. If real estate has been transferred, it will show up on deed records. Work with real estate professionals to verify property ownership and address any discrepancies in the listing.
26. Forging Documents
Some individuals may go so far as to forge or alter documents, such as financial statements, tax returns, or property ownership papers, in order to mislead the court and hide assets.
How to uncover it: If any financial documents appear suspicious or inconsistent, request verification from the institution that issued them. A forensic document examiner can also analyze documents for signs of forgery or alteration. Look for mismatched signatures, fonts, or any discrepancies in dates or figures.
27. Increasing Expenses During Divorce
A spouse may attempt to inflate personal or business expenses just before or during a divorce, attempting to reduce the amount of marital assets available for division. They might cite high medical costs, excessive personal spending, or inflated business expenses.
How to uncover it: Examine the last few months of financial activity before the divorce to identify unusually high or unexplained expenses. Analyzing expense patterns and comparing them to prior years can provide insight into potentially manipulated spending.
28. Hiding Income from Side Jobs or Freelance Work
If one spouse has additional income from side gigs, freelance work, or part-time employment, they may try to hide this income by failing to report it during the divorce proceedings.
How to uncover it: Look through bank statements, tax returns, and credit card reports for signs of additional income. Cross-reference lifestyle changes (like expensive purchases) with reported income. A forensic accountant can help track down hidden income by analyzing cash flow patterns.
29. Concealing Tax Returns
Tax returns offer valuable insight into a person's financial situation. Some individuals may choose to hide their tax returns or provide falsified returns to obscure their true income and assets.
How to uncover it: Request copies of tax returns for several years. If tax returns seem altered, compare them with W-2s, 1099s, or other supporting documents. A forensic accountant can help ensure tax returns are accurate and provide a deeper dive into potential discrepancies.
30. Taking Out Loans Against Assets
Another way to reduce the apparent value of assets is by taking out loans against valuable property or investments (like real estate or stocks). These loans can make it appear that there is less available for division because the asset is encumbered with debt.
How to uncover it: Look for any loans or liens placed against assets and request full documentation. Investigate whether these loans were taken out recently or under questionable circumstances. Reviewing asset statements and bank records can help expose hidden loans.
31. Concealing an Inheritance
If one spouse receives an inheritance during the marriage, it may be considered separate property. However, in some cases, a spouse may attempt to hide or mischaracterize the inheritance to avoid sharing it.
How to uncover it: Review statements and any records related to inheritances, such as wills, trusts, or life insurance policies. If necessary, consult with family members or the probate court to verify the inheritance and its value.
32. Hiding Gifts
Spouses may receive gifts during the marriage (often from family members), and those gifts may be concealed to prevent them from being included in the division of assets.
How to uncover it: Interview family members or friends who may have given or received gifts during the marriage. Reviewing any gift tax returns or insurance policies related to the gifts can also shed light on hidden assets.
33. Selling Assets Below Market Value
Some spouses attempt to "sell" assets (such as real estate or vehicles) at an undervalued price to relatives or friends, thereby decreasing the apparent value of those assets during divorce proceedings.
How to uncover it: Look for evidence of asset sales that fall below the fair market value. If the sale appears to be a transaction between family members or close associates, further investigation may be needed to ensure that the transaction is legitimate.
34. Creating Shell Companies
A spouse may create shell companies (or hidden corporations) to hide personal assets by transferring ownership of valuable items into the company. These companies can make it appear that the assets belong to the business, rather than the individual.
How to uncover it: Investigate the ownership structure of any companies, and request full disclosure of all business interests and holdings. Forensic accountants can track down any hidden company interests, especially if assets have been fraudulently transferred.
35. Using Fake Invoices
In some cases, a spouse may use fake invoices or expense claims to reduce the apparent value of business assets. These invoices might falsely show that money has been spent or owed, thereby diminishing the business’s true worth.
How to uncover it: Review invoices and receipts for authenticity. Ask for supporting documentation, such as receipts or contracts, to verify that expenses are legitimate. A forensic accountant can examine financial records for signs of fabricated invoices or expenses.
36. Hidden Compensation via Stock Options
Executives or high-ranking employees may receive stock options or other forms of hidden compensation that aren't immediately obvious in the financial records.
How to uncover it: Review employment contracts for stock options or deferred compensation. Examine financial statements and ask about any bonuses, incentives, or non-salary compensation that may be hidden from view.
37. Altering Financial Statements
Another tactic is to alter personal or business financial statements to make it appear as though the individual has fewer assets or more liabilities than they really do.
How to uncover it: Request copies of financial statements, tax returns, and other relevant documents. Compare the documents with bank statements, loan applications, and other forms of evidence to identify any discrepancies.
38. Concealing Ownership of Timeshares
Some spouses hide ownership of timeshares or vacation properties, claiming that they don't own them or that they are not part of the marital estate.
How to uncover it: Look for hidden timeshare contracts, payment records, and title documents. These properties are often overlooked during divorce, so asking for a full inventory of assets can help uncover them.
39. Moving Property to a Business Entity
A spouse may move valuable property, such as real estate or vehicles, to a business entity to hide the asset from divorce proceedings.
How to uncover it: Investigate the business structure and ownership records. Request full disclosure of any property moved into the business and work with a forensic accountant to uncover the true value of business holdings.
40. Underreporting the Value of Jewelry or Art
Valuable items like jewelry or artwork may be undervalued during the divorce process to avoid dividing them or disclosing their true value.
How to uncover it: Hire an appraiser to assess the true value of any artwork or jewelry. Compare the reported values with appraisals or market values to identify discrepancies.
41. Hiding Assets in Storage Units
Some individuals may rent storage units to stash valuable property, from antiques to expensive jewelry or art collections. These assets are often kept away from the home and are not listed in the divorce settlement.
How to uncover it: Ask about storage units or any offsite storage agreements. Review any storage rental contracts or payments made for storage units. Contact storage facilities directly to ask about rental agreements and access to personal property stored.
42. Moving Assets to a Spouse’s Name
A spouse might transfer property or assets into the name of their partner to prevent them from being included in the divorce settlement.
How to uncover it: Review property records, bank accounts, and other financial documents to ensure that the assets were not transferred to the other spouse’s name. Request a full inventory of assets and a history of ownership to verify that the property hasn't been transferred just before or during the divorce.
43. Setting Up Joint Accounts with Third Parties
Some individuals may open joint accounts with friends, relatives, or business partners to move funds out of the direct reach of their spouse during the divorce process.
How to uncover it: Investigate any unexplained joint accounts that may have been opened during the marriage. Review account statements and look for discrepancies or suspicious transfers. Consult with financial experts or accountants to track these accounts and uncover any hidden assets.
44. Using a Family Member’s Name to Hide Property
A spouse may transfer assets or real estate into the name of a family member to keep it out of the divorce settlement. This tactic often relies on a trusted friend or family member to act as a middleman in hiding the assets.
How to uncover it: Review the names listed on property titles, deeds, and bank accounts. Interview family members or friends to see if there have been any transfers or gifts made in recent months. You can also ask for full disclosure of any property owned by family members or third parties that may have been transferred recently.
45. Using Undisclosed Investment Accounts
Sometimes, an individual may open secret investment accounts to hide assets. These accounts might include investments in stocks, bonds, or mutual funds that aren’t disclosed during divorce proceedings.
How to uncover it: Request full disclosure of all investment accounts, including brokerage accounts, retirement plans, and mutual funds. Work with a forensic accountant to review your spouse's financial history and track hidden investments. Brokerage firms can sometimes be subpoenaed to uncover undisclosed accounts.
46. Pretending Assets Are Not Valuable
A spouse might intentionally downplay the value of an asset by claiming it is damaged, outdated, or not worth much. This could apply to collectibles, antiques, or even vehicles that are still in good condition but are undervalued.
How to uncover it: Seek expert appraisals for the assets in question. This can help determine the true value of items that may have been devalued or minimized. Compare market values and assess the depreciation rates to confirm the actual worth.
47. Hiding Assets Through Business Transactions
A spouse may engage in suspicious business transactions to transfer assets outside of the marital estate. This could include sales to "friends" or family members or making deals with business partners to manipulate asset values.
How to uncover it: Analyze business financial statements and look for large or unusual transactions that don’t seem to benefit the business. Interview employees, vendors, and business partners to identify any questionable transfers or deals. Business records can be subpoenaed to trace assets and transactions.
48. Moving Money Through PayPal or Venmo
People may move money or assets through platforms like PayPal, Venmo, or other peer-to-peer payment systems, avoiding traditional bank records. These transactions can be difficult to trace and are often used to conceal assets.
How to uncover it: Examine PayPal or Venmo accounts for activity involving large transactions or frequent transfers. You may need to subpoena transaction records directly from these platforms. Forensic accountants can also look for unreported funds moving through these types of services.
49. Using a Custodial Account for Children
A spouse may set up a custodial account in the name of the children, but use the funds for their own benefit during the divorce. While these accounts are supposed to be for children’s future, they may be misused for hiding assets.
How to uncover it: Review statements for any custodial or trust accounts set up for children. Investigate the nature of the transactions and ensure that the funds have not been diverted for personal use. Ensure full disclosure of all accounts that could be considered part of the marital estate.
50. Hiding Assets in Personal Loans
A spouse may take out a personal loan and claim it as an individual responsibility, using the loan proceeds to purchase assets that they then hide or fail to disclose in the divorce settlement.
How to uncover it: Review any personal loan agreements and check whether the loan proceeds were used to acquire new assets. Compare the timing of loan applications with major purchases or lifestyle changes. Request full disclosure of all loans, including personal loans, business loans, or any other sources of credit.
How to Protect Yourself from Hidden Assets in a Divorce
Now that we've covered 50 tactics that some individuals use to hide assets, it's important to take proactive steps to protect your financial interests during a divorce. Below are a few ways you can safeguard yourself:
- Full Financial Disclosure: Always request a full and complete disclosure of all assets, income, and debts. This includes requesting supporting documentation for all financial claims, such as tax returns, pay stubs, investment records, bank statements, and property deeds.
- Hire a Forensic Accountant: A forensic accountant specializes in investigating financial records to uncover hidden assets. They can analyze complex financial situations and detect discrepancies or unusual transactions that may point to hidden assets.
- Work with an Experienced Divorce Attorney: An attorney can guide you through the legal process of asset discovery and help you obtain any necessary subpoenas, interrogatories, or depositions to ensure that your spouse is fully transparent.
- Use Technology to Track Assets: Digital forensics can be invaluable in today’s world. Social media, email accounts, and even mobile devices may provide evidence of hidden assets or financial transactions that were concealed.
- Scrutinize All Transactions: Pay close attention to any significant financial activity before and during the divorce. Track large cash withdrawals, unusual transfers, or assets that appear to have been sold or transferred.
Georgia Divorce Lawyer
In Georgia, like in most states, hiding assets during divorce proceedings is both unethical and illegal. Both spouses are required to disclose all their assets and liabilities during the divorce process. However, some individuals still try to conceal their wealth through creative, and often deceptive, methods.
By understanding the 50 common ways that assets are hidden and knowing how to uncover these hidden assets, you can take steps to ensure that the division of property is fair and that your financial rights are protected.
Working with the skilled divorce lawyers at The Sherman Law Group can make a significant difference in uncovering hidden assets and securing a fair outcome.
If you suspect that your spouse is hiding assets, it's crucial to act quickly. Taking proactive steps now can protect your financial future and ensure that your divorce settlement accurately reflects all the assets and property that should be divided.
If you’re facing a divorce and suspect your spouse may be hiding assets, or if you simply want to ensure that your divorce settlement is equitable, contact our experienced Georgia family law attorneys today. We have the knowledge and resources to help you uncover hidden assets and ensure your divorce is resolved fairly.