Financial infidelity is regrettably common in marriages, especially when one partner is not involved with paying bills, managing cash flow, or communicating with the financial advisor. When the marriage ends in divorce, the spouse who handled the finances often tries to hide cash and investments and falsify debts and expenses.
If you have always left money matters to your spouse and are now either considering divorce or in the middle of one, financial infidelity can affect what assets you receive and how much you are awarded in alimony and child support. Concealing money, property, and liabilities is illegal, but that doesn’t always act as a deterrent.
Here are four ways that your spouse could potentially hide money and assets from you.
- Transfer funds to a separate account. Money can be taken from your joint brokerage and bank accounts and put in your spouse’s private account. It’s fraudulent, but alarmingly effective, so it happens a lot.
- Use the “cash back” feature when buying something with debit. It’s easy to purchase something like groceries and ask for cash back. $40 here and $80 there can add up over time. The total charge shows as groceries or whatever legitimate expense the card was used for, so the surplus money is nearly impossible to detect.
- Overpay the IRS. A spouse can intentionally overpay the IRS, and then request the IRS to apply it toward next year’s taxes. By then, the divorce is likely over, and the spouse will keep the oversized refund.
- Transfer assets to a friend/confidant. Your spouse can easily transfer investments or cash from your joint bank or brokerage account into that of a friend or family member. After the divorce is finalized, he or she can then transfer the assets back into an account your spouse holds. This trick may work because it can be difficult to find the transfer out and the account that it has been transferred to.
If you have ever been concerned with marital finances before, now is the time to get involved. Don’t accept the financial disclosures of your future ex at face value: search the records for joint holdings and if necessary get advice from a financial advisor and your attorney. It’s critical that you have an experienced divorce attorney on your team to help you spot and resolve any attempts by your spouse to conceal money in order to gain a better settlement. Please contact us today to learn more!