Sneaky Investments

How Spouses use Children as an Asset Hiding Vehicle

Another way dirty divorce tactic is to hide assets is a child's 529 plan, which is designed for saving money for a college education for them. This plan has certain tax benefits associated with it and is set up so the child is named the beneficiary and the parent is the account owner. The abuse occurs when the parent that is the owner, starts funneling money into the account to basically hide it.

The premise for this is that it was the child's education money, not part of the marital estate. After the divorce is final, however, the owner can withdraw the money, just suffering a tax hit. Another tactic is overfunding your pension. A large part of your paycheck can be diverted into your defined-benefit pension plan, leaving little left for alimony or a distributive award. This type of an investment is perfect for hiding money. As with the children's 529 plan. Once the divorce is final the money can be withdrawn although with a tax hit but saving you money in the long run.

These are just a few of the dirty tricks that can be used to divert assets in a less than amicable divorce. Be aware of your household finances even if you are not the principle breadwinner, stay informed.