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Discovering hidden assets and unreported income in divorce

Financial deceit is unfortunately a far too common occurrence in high-asset divorces. It is not uncommon for the spouse that does not run the family business or handle the couple's finances to discover that their spouse is hiding funds and property.

If you suspect that your spouse is hiding assets, address this concern early with your divorce attorney and obtain adequate information to make an informed decision.

Starting point: get organized

You know there is more money than your spouse says there is, but how is this uncovered during a divorce proceeding? When one spouse suspects their partner of hiding assets, it is important to weigh the costs of discovery against the benefit if recovered.

Depending on the size of the marital estate, it may or may not be worthwhile to start investigating in detail. To determine whether pursuing recovery is worthwhile, you should first think about the following logistics:

  • What is the character of the hidden asset? Is it a security (stock or bond), property or cash obtained by financing unknown to the other party?
  • How might ownership have been hidden?
  • How might you discover it?

Start by examining banking and investment account records to see if any unusual transfers or purchases were made. Pull your income tax returns and banking and investment account statements.

Has your spouse created or moved funds into retirement or investment accounts? Are there any contracts or commissions from their job or business dealings pending that would be paid after the divorce is finalized? If you have children, check to see whether any accounts have been created in their name. A copy of credit reports and insurance statements are useful too.

Determine the nature of the hidden assets

Once you have gathered financial materials, think about how these things may be hidden. There are a number of different ways a person may hide assets, including:

  • Transferring property to a third party with the understanding that title will revert back following the divorce proceeding
  • Creating false documentation of ownership
  • Paying off false debts to persons outside the marriage
  • Using funds to purchase securities such as stocks and bonds, or hard assets such as art, jewelry or collectibles
  • Investing in businesses that are simply holding corporations created to obscure the owner of the funds it holds

If property has been transferred to a third party, the deed or title will reflect the change of ownership. Your attorney can help you locate where to find that information in your county of residence or where the property is located. Talk to friends and family and ask if they've noticed anything strange or heard of any financial activity involving your spouse.

If you are concerned about offshore accounts, then there is an additional layer of difficulty, as other countries and territories are very protective of the information of those who invest there, and the country's secrecy laws may thwart attempts at discovering whether any accounts exist and the amount within. You can examine your spouse's passport to get an idea of which countries were visited.

Employing experts: Forensic accountants

In some situations, you may need to hire a forensic accountant or special investigator to dig through the records and examine how much money was brought in and map out where it all went. This individual may serve as an expert witness in court proceedings and testify on your behalf to recover the hidden assets.

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Hecht Family Law
12600 Deerfield Pkwy
Suite 125
Alpharetta, GA 30004

Phone: 678-926-9234
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