Beth McRae Mayfield
April 19, 2019
Although couples divorce for a multitude of unique reasons, a commonality that often exists before or during divorce is the loss of trust. And when there’s mistrust in a marriage, it’s conceivable that one or both spouses may have hidden assets from the other. It is in your best interest to make sure all assets are brought to light during the divorce process.
Since finding hidden assets—or eliminating the possibility that hidden assets exist—helps increase the likelihood that you’re treated equitably in your divorce, it’s important to start doing your homework as soon as possible. If you’re the one initiating the divorce process, it’s usually advantageous to take inventory of your assets before raising the topic with your spouse.
Understanding how people typically conceal their assets can help you track them down more efficiently. Most people hide assets in one of four ways:
While proving that any of these events has (or has not) occurred can be challenging, a paper trail typically accompanies the existence or cover-up of most assets. If your spouse has been diligent about covering their tracks, finding these documents can be difficult. Therefore, a good place to start is past tax returns, since these records are often the easiest to locate and access.
As you look through past tax returns, certain reported items—as well as discrepancies in these items year-over-year—can raise red flags and help you uncover hidden assets. With the help of your lawyer or tax advisor, you should pay close attention to the following areas that often point to the existence of related assets:
While finding the assets indicated by past tax returns may still be difficult, identifying all potential red flags before the divorce proceedings can help your lawyer ask specific questions and represent your interests more effectively.
In addition to past tax returns, don’t forget about any hiding spots and safe places that you and your spouse may be utilizing to protect assets and important documents. Safes, safe deposit boxes and other places within your home may reveal the existence of property and other information to assist you in the divorce process. Additionally, mortgage closing documents often contain a wealth of information, since lenders require you to list all assets, liabilities, and sources of income when you apply for a mortgage.
From a practical standpoint, divorce is the dissolution of a partnership, which results in the equitable division of assets. One way to make sure you’re treated fairly is to gather as much information as you can prior to the proceedings.
If you’re considering a divorce or are going through one, the best practice is to take inventory of all assets and financial documents in your name, your spouse’s name or both—including any assets that your spouse may be hiding. It’s not uncommon for assets to disappear once the divorce process starts, so the sooner you can take inventory, the better.
To learn more, please visit our Wealth Strategies resource page as we prepare to launch our white paper booklet on this topic.
Beth Mayfield is a senior wealth strategist for CIBC Private Wealth Management in Atlanta, with more than 20 years of industry experience. In this role, she works closely with clients and their advisors to develop and implement charitable, estate and wealth transfer planning as part of CIBC Private Wealth Management’s integrated wealth management process.
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