Four Tricks Cunning Spouses Use To Hide Assets During Divorce

You can divorce without a lawyer, but it isn't advisable and can be costly in some cases. For example, your partner can hide assets and reduce your proceeds from property division during the divorce. Through the discovery process, a lawyer can help you unearth hidden assets that you may otherwise not know about. Without it, your spouse can easily hide assets through sneaky ways, such as:

Overpaying Creditors

This trick works because there are those who genuinely make mistakes and overpay their creditors. It may be due to an accounting error, or they may just forget how much they owe. A spouse who wants to hide assets this way will "forget" and overpay their creditors. After the divorce, they can then "realize" their error and process the refund.

You cannot prove it was a deliberate move even if you later learn about the overpayment. A person can even use the Internal Revenue Service (IRS) for this and get the refund after the divorce or use the excess for future tax obligations.

Delaying Income

If your partner is determined to hide assets from you, they may even delay some forms of income and revisit them later after the divorce. For example, a salesperson may put bonuses or commissions on hold, and a contractor may delay signing a contract (there are clever ways of doing this; for example, they can ask for more information knowing it will take time). Once the divorce is finalized, they will speed up the issues and keep the whole check.

"Forgetting" about ESOs

An employee stock option is an employee's right to buy the company's stocks for a specific (predetermined) price at a future date. For example, your partner's company may promise them 10,000 stocks for $25 over four years. The idea is that stock prices will rise after four years, and your spouse can make a tidy sum by buying and selling the stocks. Because ESOs are assets, you are entitled to your fair share during divorce.

Unfortunately, ESOs don't generate a paper trail that can tell you how many your spouse has, or even if they have them at all. As long as your partner hasn't taken control of the ESOs, they won't even appear in their tax returns. Therefore, if you don't ask (the company) about the ESOs and your partner doesn't volunteer the information, you may divorce without knowing about them.

Buying Easy-To-Overlook Expensive Items

Finally, your spouse may even buy expensive items and dispose of them later after the divorce. Obviously, this will not work for everyday assets such as expensive cars or properties. However, other expensive items are easy to overlook. For example, your partner may spend money on a painting or antique furniture. If you aren't into such things, you may easily ignore them when dividing assets during a divorce. 

For more information about discovering your partner's assets during a divorce, contact a firm such as Nelson, McPherson Summers & Santos LC.