Dealing with hidden assets in a high-net-worth divorce is not an uncommon challenge. High net worth individuals often have multiple financial accounts, whether it be checking, savings, money market, investment or retirement accounts. Most people who have a lot of money and high net worth don’t simply have their money sitting in one pot — it is diversified. This can make tracking down all of someone’s assets very difficult in divorce, especially when they are less than forthcoming about what they own and have access to.
Finding Hidden Assets During the Divorce Process
One of the common predicaments we see from clients is that they have no idea what their marriage’s financial picture looks like. How can someone enter into an agreement with another person awarding them assets if they don’t know what is in the marital pot? It is super important that the parties have full and fair disclosure of all assets and liabilities prior to settling their divorce case. And, for the spouse who is not privy to their marital finances, we have ways to ensure that they know what the “marital pot” contains, through the discovery process.
Handling the Scheming Spouse
When it comes to hiding assets, we have literally seen it all, from the spouse whose lifestyle is funded by their parents, to the spouse who deals in all cash, to the spouse who has all of their bank accounts held jointly with their parents. The truth of the matter is that these schemes are much more common than you’d think, especially when considerable wealth is involved. Having multiple places to stick assets away makes it even harder to track unless you are working with someone who knows where to look.
Divorce Discovery to Find Hidden Assets
When we run into a hidden asset situation such as those mentioned above, the first thing we do is issue discovery. We look at bank and financial records going back, on average, from three to five years, and sometimes longer. We may even skip the step of asking the spouse to produce the records and go straight to subpoenas if we know where the person banks/invests and we think they are likely to try and deceive our attempts at discovery. We will, in those scenarios, get the records straight from the source.
HEAD STRAIGHT TO THE SOURCE WITH SUBPOENAS
We will subpoena employers, investors, board members, banks, credit card companies, investment companies, retirement plans, the whole nine yards, to make sure we have a complete financial picture of the marriage. We can even submit a request to the IRS for Income Tax Transcripts if someone refuses to give us their tax returns, or if the tax returns they have tendered do not seem accurate, to verify what they submitted to the IRS (with their signature, which we can ask the Court to order).
GO OVER FINANCIAL RECORDS WITH A FINE-TOOTH COMB
Then, once we have the documentation, the next step is to go through every financial record with a fine-tooth comb. We look for large transactions, money going into and out of accounts we do not recognize, monies transferred to and from individuals, and anything else that is not along the regular course of day-to-day expenses. We also have our clients reviewing these documents in conjunction with us, as they are more likely to recognize if there was, say, a trip taken by a significant other they were not on, or jewelry purchased that they did not receive.
Believe me, we’ve seen it all.
SUBPOENA ADDITIONAL ENTITIES TO REACH UNDISCLOSED ACCOUNTS
At this point, we would then issue additional subpoenas to any entities we saw in the discovery we received to try and see if there are any undisclosed accounts. If there are in fact hidden accounts, the guilty party is likely to lose favor with the Judge, at a minimum.
SPOILER ALERT: Not disclosing bank accounts is a HUGE “no-no” in divorce courts, possibly punishable by sanctions or worse.
Is Discovery Always Needed in High Asset Divorce?
Sometimes high asset couples may not need to go through the discovery process. There are spouses that are completely forthcoming about what they own and where their accounts are, or both of the parties have full knowledge of all of their assets and financial situation. In that case, we can always settle a divorce with a proposal that is equitable to our client without discovery. As long as the client is certain he or she understands their marital estate’s assets and liabilities going through discovery, subpoenas, and the like, may be avoided.
Often times, however, a high asset divorce require someone to investigate and discover where all of the money is, how much is there, and what the spouse is entitled to. If that is the case, we are well-versed in obtaining the documentation to ensure our clients receive the best settlement in their divorce.
THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/high-asset-divorce/hidden-assets-divorce-finding-money/