Divorce Negotiation: Identify Hidden Assets

Key Points

Just because you work all your life and you feel you have a right to your own stuff. Separate money and retirement accounts may still be subject to equitable distribution in a divorce.
It is important to make sure any assets are not hidden. Tax returns are a good place to start looking for hidden assets including trusts, partnerships or real estate holdings.
You may want to enlist the help of a forensic accountant who has the knowledge and resources to uncover hidden assets.

Once a divorce begins some people do whatever they can to preserve what they feel is their own money. Some maintain secret accounts or other financial activities throughout an entire marriage. These assets may be subject to distribution.

Financial professionals (including forensic accountants) check a variety of resources to uncover potential hidden assets. These include:

Tax returns, one of the best places to start. A five-year lookback for any inconsistencies in income, the presence of trusts, partnerships or real estate holdings, can be most revealing.
Business records. When a spouse is a business owner, corporate or partnership returns may show a change in salary, charging personal expenses to the company, or excessive retained earnings. Sometimes someone hires a "friend" who agrees to return the money paid after the divorce.
Checking account statements and cancelled checks. Cancelled checks can also be quite revealing, particularly for an investment property, which can make a substantial difference in the marital estate.
Savings accounts. These may reveal unusual deposits or withdrawals in amount or pattern that could point to a hidden asset such as a dividend producing investment. In addition, cash may be hidden almost anywhere.
Brokerage statements. These are valuable in tracking the purchase and sale of securities. If securities are sold and the proceeds are not accounted for, it is certain that the assets are out there somewhere.
Expense accounts. These can be abused when corporations give employees a great deal of leeway in their expense account reporting. Cross checking between expense account disbursements and savings/checking account deposits may indicate a pattern of abuse if the deposits exceed legitimate business expenditures.
Children's bank accounts. These may be opened as a custodial account and to hide assets as well. In some of these cases, interest is not reported as income on tax returns, and no return is filed for the children.

Information Provided by: Divorce Source, Inc.

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