People going through a divorce should know how to look for the signs that a spouse is attempting to hide assets.
Washington is a community property state, which essentially declares any property that a couple acquires during the marriage will be subject to division. As the Washington Courts note, community property law can be complicated and require professional assistance to navigate.
One potentially problematic issue can arise during the financial disclosure portion of the proceeding. Some people may try to hide assets in order to prevent the other spouse from getting part of them. Here are four ways to tell if that is happening:
1. Change in financial statements
There are several ways that financial statements can leave clues that assets have been misrepresented. First, if these documents used to arrive by mail or email but have suddenly stopped, it could be because the spouse does not want anyone to see certain activity.
Secondly, as Forbes magazine reports, someone may try to underreport income or assets on documents such as a tax return. Professionals nearly always use tax documents to review a couple's property. If the income has not been correctly reported, it may be left out of the equation during the divorce proceedings.
2. Uncollected income
Financial Advisor magazine points out that some spouses may try to leave money on the table until after the divorce is final. For example, a spouse who is eligible for a bonus could wait to collect it, or an employee can defer salary.
3. Increase in expenses
Expenses may suddenly pop up, such as owing debt to friends or family members. This could be used as a guise to simply stash money until after the divorce is over. The Association of Divorce Financial Planners also states that a spouse might try to overpay creditors or pay down debts to hide funds. Lastly, it is possible that a spouse will simply start spending a lot of money, taking trips and buying expensive gifts as a way to keep funds from getting divided.
4. Hiding money
Stashing cash into a lock box or safety deposit box would be one way to hide money. In other situations, someone will actually create a new bank account and transfer funds into it. For example, a parent could open a new account using a child's Social Security number. This would give him or her access to the funds while attempting to conceal the true owner of the money.
The ADFP strongly urges anyone going through a divorce in Washington or elsewhere to ensure that the financial statements that are provided are accurate. Failing to do so could mean missing out on much-needed cash and property. Anyone who has questions about matters like this should consult with an attorney.