How to Find Hidden Assets during a Divorce in Wisconsin
Finding hidden assets require going through financials and taxes. To find hidden assets the following are a great place to look first:
- Tax Returns
- Savings Accounts
- Money Market Accounts
- Investment Accounts
- Checking Accounts
- Lifestyle Analysis
- Cash Flow Analysis of Business
Something anyone going through a divorce should be aware of is the possibility of assets being hidden from them affecting their property division. This is especially true in high asset divorces or when one spouse was responsible for the finances during the marriage. The concept of hiding assets is not uncommon, especially if the divorce has been looming for a long while. When people do this, they're taking a risk that will not be worth the possible jail time if caught.
There are numerous ways to identify hidden assets, but normally assets are placed in the hands of third parties or hidden with false documents.
The Process of Hiding Assets
When a spouse decides to conceal assets from their partner often times their relatives or acquaintances cooperate in the deception. In instances when others are involved we typically discover the placement of possessions or investments in safety deposit boxes.
In Plain Sight
Another method of hiding assets is a method we call “in plain sight”. This is when one spouse pays down mortgages and or lines of credit. This may seem like something that will affect each party equally, but if assets are not liquid, such as cash, it is more difficult for the parties to separate the property equally.
Also, the process for selling assets can be lengthy. One party may use the process of a lengthy sale to their advantage especially if they are higher earning spouse. The process for proving one party is purposely avoiding the sale of an asset or property can be expensive in a post-divorce action.
Some individuals will use another method called “repaying debts.” The use of marital assets to pay off old debts is a legitimate use of marital assets, so proving that it was done to hide assets can be difficult. There are two ways this method is used. First, one spouse may pay off an “old debt” to a friend, but the intent is clear. The friend is a way to hide assets.
The second way spouses use the “repay debt” method is by paying off old student loan debt. The unfortunate part of this scenario is that student loans are generally in only one person's name. So while using marital assets to pay off the loan is a legitimate use of them, it only benefits one party in the long run.
Children's Bank Accounts
The most sinister method of hiding assets is establishing a joint bank account using a child's social security number. This can be hard to find and is a method some individuals use to their own advantage in an unethical way during a marriage.
The final method of hiding assets is when one spouse works with an employer to delay bonuses and or raises until the conclusion of the divorce. This makes their income and assets appear smaller than they actually are. Unfortunately, this delay of payment from an employer can be somewhat difficult for individuals to prove in court.
How can Hidden Assets be Uncovered?
If there is a likelihood of assets being hidden an investigator must have accurate personal information to find hidden assets, including the full legal name and variations (nicknames, abbreviations, common misspellings, aliases).
Since many times assets are hidden with the help of others a list of names and addresses of close relatives and friends will also prove very useful in the investigation of finding hidden assets.
A private investigator will look in several places first. Below is a list of locations where assets are typically hidden.
- Income Tax returns – Tax returns provide a roadmap and a great place to begin looking for clues of hidden assets.
- W2s – W2 forms detail salary information received as well as any of the deferred compensation packages or executive benefit plans.
- Overpayment – Another way to uncover hidden assets is looking for overpayment of state and or federal taxes.
- Alternative Minimum Tax Line – Entries found on the alternative minimum tax (ATM) line may indicate a spouse is hiding assets. A trained investigator knows what to look for here as using this line item is very technical tax law.
- Form 6521 – This tax form contains the ATM calculation. Line items on this form can help identify accelerated depreciation on real estate and incentive stock options.
- Form 4797 – Tax form 4797 will indicate the sale and amount of business items.
- Schedule A – Schedule A will reflect deductions of interest, thus indicating the existence of loans. Finding the existence of loans on Schedule A can lead to the discovery of loans used to purchase of undisclosed assets.
- Schedule B – Schedule B will show interest and dividend income on lines11 and 12. These are typically used to hide assets in off shore accounts and or trusts. Entries on Schedule B could be the only indication of an off-shore foreign trust account.
- Schedule C – Schedule C will indicate profits or losses from a business. Using Schedule C may help find evidence of the business used to fund a Keogh plan, increasing retirement deductions.
- Savings Accounts or Money Markets – Reviewing large deposits and or withdrawals could point to a hidden stock paying a dividend or interest.
- Checking Accounts and Cancelled Checks – Checking account statements and the backs of checks are a good place to find dirt. The backs of checks will show the account number and financial institution checks were deposited either finding a hidden account or an accomplice.
- Lifestyle Analysis – Looking and analyzing a lifestyle can then be matched the income being reported. Digging into the types of clothes purchased, car being driven, or a significant difference in lifestyle between parties can help evaluate income.
- Cash Flow in a Business – Analyzing how money flows through a business may indicate one of two things: 1) good internal controls when the person receiving and recording deposits is different from the person who deposits the funds, or 2) poor internal controls where the spouse receives, records and deposits the funds. Poor internal cash flow controls could show one spouse hiding assets/cash or conducting business for future favors or payment.
References: Risks of Hiding Marital Assets