In Texas, couples who decide to divorce must divide the assets they have accumulated during their marriages. Each spouse is entitled to receive to a “‘just and fair’ division (which may often translate to one-half) of what was amassed during the marriage. Unfortunately, some people will attempt to hide or conceal assets to prevent their spouses from receiving their fair share during the property division process. Understanding the most common ways that people try to hide assets might help to find them.
There are several types of sham transactions that a spouse might engage in to hide money. He or she might “loan” money to a friend or family member to remove the funds from the marital estate. Once the divorce is final, the family member or friend will then return the money. If money has been loaned to a third party, accounting for that amount should be included in the divorce negotiations. Some people might also transfer bank accounts and investment accounts into a friend’s or family member’s name and fund them with marital funds. Others might sell assets for far less than their value to friends or family members with the intent to have them transferred back after their divorces.
Using the IRS or employers
Some spouses use the IRS or their employers to try to hide income. For example, a spouse might ask his or her employer to withhold some of his or her earnings, commissions or bonuses until after the divorce is final. The spouse might also deliberately under-report their income on an income tax return to make it appear that they earn less than they really do. Some people deliberately overpay the IRS for taxes with the idea that they will receive a refund after their divorces are final.
Being aware of the common ways that people try to hide assets in divorce is important. If a spouse believes that his or her spouse is taking steps to conceal or hide assets, it might be important to hire a forensic accountant to identify their locations and values. A family law attorney might work with a forensic accountant to protect their client’s interests during the asset division process.