Divorce can be a nasty ordeal. As if dividing the family wasn’t bad enough, the division of marital property must also be considered. Divorce courts can aid a couple in crafting a financial settlement or can step in and equitably divide the property between the spouses. Unfortunately, some spouses hide assets to keep them from being divided with the soon-to-be ex.
In New York, property acquired during the marriage, the appreciation of that property and retirement benefits earned during the marriage are considered marital property. Assets owned before the marriage, gifts or inheritance and the appreciation of those assets is considered separate property and belongs solely to the original owner. In a New York divorce, absent some other form of agreement, spouses keep their separate property and the marital property is “equitably” divided.
Equitable division does not mean equal, but fair. In deciding how to divide them, a court takes into account numerous factors, including:
- The length of the marriage
- The age and health of each spouse
- The income and property of each spouse at the time of marriage and the divorce filing
- Whether spousal support was awarded
- The tax implications
Investigating Hidden Assets
Unfortunately, it is not uncommon for one (or both) spouses try to hide marital assets to keep them from being divided. British accounting firm Grant Thornton estimates it happens in around 20 percent of divorces and 88 percent of the time it is the husband doing the hiding. Assets can be hidden in a variety of ways, including the following:
- Secret retirement accounts
- Joint bank accounts with a young child
- Safety deposit boxes
- Phony debts “owed” to family or friends
- Bearer bonds or Series EE savings bonds
- Delayed work bonuses or stock options
- “Gifts” (like cars and jewelry) to be returned once the divorce is finalized
- Antiques and collectibles, possibly kept at the office
While uncovering these hidden assets can prove tricky, there are a few common places to look. Some are easier to access than others and some may require the help of a forensic accountant. Income tax returns offer a snapshot of one’s financial holdings. Looking over returns from the past five years may give clues to unknown assets.
The financial statements from checking and savings accounts will show any large purchases or money transfers made. Requesting a credit report from each of the three credit bureaus may unearth unknown lines or credit or mortgages. If a spouse owns a business, verifying payroll records and expenses may uncover dummy employees or falsified business expenses.
Depending on a couple’s assets, spending the time and resources to investigate potentially hidden assets could pay off in the long run. If you believe your soon-to-be ex spouse is hiding marital property during your divorce, contact an experienced divorce attorney to discuss your situation and ensure you receive a truly equitable division of assets. In need of a family law attorney, contact us today firstname.lastname@example.org.