Asset division is an important part of the divorce process because it is the financial starting point. Tennessee law on asset division is referred to as equitable division, and while the law does not require that assets be divided equally, assets are supposed to be divided fairly. In an attempt to gain more than their share, sometimes former spouses can be less than forthcoming when it comes to identifying assets subject to division.
Hiding or getting rid of money or assets in order to restrict the amount and type of asset from division during divorce is illegal. But, we all know that just because something is illegal it may not prevent someone from engaging in the illegal behavior, so how can you tell if your former spouse is being underhanded?
Signs of Asset Hiding
There are a number of signs that may indicate whether a former spouse is trying to hide or disguise assets. According to Jeff Landers, a Forbes contributor who is an expert in financial issues related to divorce, some common strategies to hide assets are:
- The underreporting of income to the IRS. If the income is not reported to the IRS, it cannot be used in a financial analysis.
- The deferment of salary, bonuses, commissions or new contracts. The delay of income and bonuses is meant to keep the income from being recorded and a part of divorce proceedings.
- The creation of a plan with family members or friends to create bogus loans. The payments made by the former spouse are returned to former spouse after divorce.
- The purchase of items that could be undervalued or overlooked, like collector's items. The items could also be bought for the office or workplace.
- The placement of cash in safe deposit boxes in the house, bank or elsewhere.
- The transfer of stock to family members, business partners or front companies. After the divorce, the stock will be transferred back to the former spouse.
- The creation of a custodial account in the name of a child.
While it pays to be aware of such strategies, it does not pay to violate your former partner's privacy to oust deceptive behavior. Violating your former partner’s privacy can result in legal repercussions, and it could derail your position in divorce and property division proceedings.
One way to determine whether your former spouse is keeping assets from the court that will not violate his or her privacy is to conduct a financial analysis. A financial analysis will review expenses against sources of income, available assets and debt. If expenses are found to exceed the sources of financing, it may be an indication of concealed income or assets.
The burden of proof to demonstrate dishonest activity is often on the partner who suspects the activity. An injunction can be filed to enjoin or stop the other partner from spending or hiding assets.
If you are considering divorce and believe your spouse is hiding assets, contact an experienced divorce attorney to review your legal options.