Dividing up marital assets is one of the many aspects of a divorce. In an equitable property state, such as Colorado, marital assets get divided according to what the court deems as fair, depending on the couple's personal and financial circumstances. In an effort to keep as many assets as possible, some people resort to hiding assets from their spouse.
Although this is illegal, it is a relatively common practice. Anyone who is going through a divorce needs to be aware of activities that signify a soon-to-be ex-spouse might be hiding money. One study revealed that 30 percent of adults with combined finances have hidden assets from their partners. One common way is to hide a credit card -- something over four million men and nearly three million women have admitted to. Here are some other ways people have tried to hide assets from their spouses.
High asset marriages can create big incentives to hiding assets
The more overall value you have in assets from your marriage, the greater the potential incentive for your ex to hide assets. After all, Colorado courts will do their best to divide your assets in a manner that is fair to both of you.
The courts will use the equitable division standard that looks at the circumstances of your marriage, except for marital behavior or misbehavior, when deciding how to fairly split your assets. However, the courts rely on your self-reported inventory of assets and debts to make those division decisions.
When there are substantial assets missing from that inventory of marital assets, the courts cannot make a fully informed and accurate plan. This is why it is so important to carefully review your financial records and make sure that there is nothing missing from your inventory of assets and property checklist.
Lending or giving money to friends and family
Some people try to shrink their bank account balances by lending or outright giving money to family members or close friends. These people might use the money, or not, but the idea is to get the money back after their divorce is final. This might be done gradually, or as a larger gift or loan. In any case, it's a good idea to watch for these types of transactions with relatives your spouse seems close to.
Undervaluing expensive purchases
If your spouse has suddenly taken up antiquing, art collection, or has been buying any other valuable items, you may want to double check some of these purchases. Some people will buy things and act as if they are far less valuable than they are, all while knowing they will be able to resell the items later and get their money back. Such purchases are commonly made both in person and on the Internet.
Hobbies could be hiding substantial assets
Does your spouse collect memorabilia, trading cards, art or classic cars? You may feel inclined to write that collection off as separate property, but how much of it was added during your marriage? Collectibles and other difficult to price items like fine art can have values of hundreds or thousands of dollars.
Purchasing them during your marriage was a use of marital assets, and that means that their current value or purchase price should be included in the inventory of your possessions. Determining the current market value of these kinds of items can be difficult, but it's important if you want a fair outcome to the asset division process.
Overpaying the IRS
While many people inadvertently overpay the IRS, most are excited about getting their refund the following year. But some overpay on purpose and ask that the money be applied to their tax bill in future years. It is especially important to look out for this behavior if your spouse owns their own business or works as an independent contractor.
Transferring money to an individual account
This is one of the most obvious ways a person might try to hide assets from their spouse. In some cases, this may be an account that the spouse doesn't know about. In other cases, they might just be hoping that their spouse will be too busy worrying about other things to pay attention.
In addition to these tactics, people have also been known to hide money in their businesses, delay bonus or commission checks until the divorce is final, and take out insurance policies that can later be converted to cash. A good divorce lawyer will know all of these tricks, and how to look for signs that your spouse might have one or more of them up their sleeve. Catching as many of these as possible will increase the chances that your marital assets will be divided as they should.
Digital assets can be harder to locate
One of the reasons that unscrupulous spouses use Bitcoin, cryptocurrencies and similar digital assets to game the divorce system is that it is simply harder for people to track down those assets. For example, most cryptocurrencies don't involve an account in an individual's name. Instead, they have a blockchain record of their purchase transaction. If you don't have the information related to that purchase, it will be very difficult for you to locate or validate those assets.
However, just because they're harder to find doesn't mean it's impossible to do so. Even the IRS has found ways to track down cryptocurrency owners in order to ensure that they pay taxes on their capital gains related to cryptocurrency investing. Although it may be hard for you to handle on your own, professional help can make all the difference in locating hidden digital assets.
A forensic accountant can help ensure the division of assets is fair
If you have any reason to believe that your spouse would hide assets from you, especially if you think they have invested in cryptocurrencies during your marriage, you might want to sit down and talk with a financial specialist, such as a forensic accountant.
These professionals know exactly how to track attempts to hide marital assets by following the trail of money as it enters and leaves your household. Obtaining accurate copies of your financial records for the duration of your marriage, especially the last few years, is a critical step toward finding hidden assets in a pending divorce. If you worry about hidden assets affecting your divorce proceedings, that is one very good reason to work with an experienced Colorado divorce attorney.