Readers of this blog know that property division in a high asset divorce case can be a complex and emotionally charged proceeding, even when both spouses are making an honest and full disclosure of their assets. When one spouse is hiding income or assets, the asset division process becomes even more challenging. In a recent news interview a forensic accountant, who is often hired to find hidden assets in divorce cases, talked about the tell-tale signs of hidden assets and income.
One of the most common tactics is the underreporting of income from a business. Often a spouse will hide business income by listing personal expenses as business expenses. An absurdly low income coupled with a lavish lifestyle is one obvious clue. Another is the successful business that suddenly experiences a significant drop in reported income right around the time the divorce papers are filed. And when profits drop but purchases of supplies stay level or go up, it’s a sign something is amiss.
Other tactics used by dishonest spouses are more simple. Some business owners, for example, will deposit some customer checks into a personal account instead of the business account. Others will ask customers to pay them in cash.
In Colorado, courts will generally view income acquired during the marriage as marital property which must be split equitably between the spouses. As a result, hidden business income can have a serious impact on the other spouse if it goes undetected. A divorce lawyer who is experienced in complex asset division issues will work hard to find hidden income and make sure the client gets all that they are entitled to in the property settlement.
Source: Bloomberg.com, “Hunting for Hidden Cash in Divorce Proceedings,” Ben Steverman, June 3, 2013