What to Do When a Spouse Is Hiding Assets

What can you do if you suspect that your spouse is lying about, or even hiding important financial information needed during a divorce? Lee Rosen, retired divorce attorney and founder of the Rosen Law Firm, discusses your options.

Is my spouse hiding assets?  Transcript

Hi, I’m Lee Rosen. Is my spouse hiding assets?

Manipulating assets, hiding assets. It’s definitely a problem. It happens in cases. It’s not an infrequent thing. You should be thinking about it.

We had a case not very long ago. We represented the husband. He was the owner of a software company. The wife believed that the company was worth a great deal more money, and she hired business valuation experts. They studied the company, did their best to figure out the value. The husband said it wasn’t worth very much. He thought it was worth about $40,000, at least, his share of it.

Ultimately, we agreed to give her a share of the company based on a valuation of $100,000. Now, this is where it got interesting. She took her money and went on her way. About four months after things were finalized, the company was sold. The husband’s interest in that sale was valued at $1.5 million. Did he in some way deliberately diminish the value of the company? I don’t think so, but she certainly believes that, and is upset about it.

Valuations of companies are one of many ways in which assets can be hidden. Assets can be manipulated. Assets can appear to be worth less or more than they actually are. There are lots of other ways that spouses manipulate assets. They hide assets. We see things happen that are complicated. Things like overfunding defined benefit pension plans. That’s not an easy to thing to do, but people do it. We see things that are simple, like moving money to offshore accounts and just lying about the existence of those accounts.

Sometimes they sort of fall in between. We’ll see people manipulate the value of life insurance policies, where they can sort of hide funds in there that are not necessarily picked up upon by attorneys that aren’t looking very hard or being very creative. There are lots of different ways that people can manipulate the value of assets to make things look like they’re worth more or less than they actually are in order to impact the settlement, or if it goes to trial, the judgment of the court.

So manipulating assets and debts, it’s reality in some cases. Be on the lookout for it. There are some big red warning flags that you ought to keep your eyes out for. One is control. If your spouse is running the money and keeping you out of it. For instance, the financial accounts are all password-protected, and you don’t have access to the passwords. Or if your name is not on the account, be worried about that.

Here’s a really big one. If you see that your spouse has set up an alternate location to receive the mail — like, set up a PO box — boy, that would make me very nervous. There’s no good reason for that.

Also, keep an eye on the computer. If you’re hearing suspicious stories, “Oh, there was a hard drive crash, and we lost the files. The data has disappeared.” Or if everything on the computer is password-protected and you can’t get to it, be nervous. That’s not normal. That’s not okay. That shouldn’t be happening. And you ought to be very concerned about that.

And finally, be suspicious of money conversations that just sound like a big change. “Oh, my business is doing terribly. We’re not making any money.” “Oh, that investment has gone down the tubes. We’ve lost lots of money on that.” I’ve noticed with Donald Trump, every time the guy gets a divorce — and that happens with some frequency — it’s always preceded by a big financial downturn that he makes very public. Is that about the finances, or is that about getting ready for a divorce? If you’re hearing a lot of negative money talk, that ought to be a big red flag.

So I hate to make you paranoid. I hate to make you suspicious. But the reality is that some spouses do manipulate the finances. You need to be aware of it. You need to be thinking about it. And if it happens, you need to be prepared to deal with it.

 


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