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Hunting for Hidden Assets in Your Divorce Case


By James Livesay, Partner at Livesay & Myers, P.C.

A problem one occasionally encounters in divorce is the spouse who is unwilling, out of selfishness or greed, to disclose his or her actual assets and earnings. Where a spouse is being dishonest, it is necessary to resort to alternative measures to uncover this information.

The motivation for a spouse to lie may seem obvious. Some spouses believe that the income they earn should belong solely to them, especially where that person has his or her own business or receives income from a family source, such as a trust. By hiding assets or deferring income, a spouse can reduce his or her child support, spousal support, and the share of marital property that would have to otherwise be equitably divided between the parties.

You cannot always tell for sure whether your spouse is lying. However, certain circumstances raise good reason to be suspicious of your spouse and to be on the lookout for fraudulent conduct:

  • Your spouse is secretive about his or her financial affairs. For example, has your spouse asked you to sign financial documents, such as a joint tax return or requests for loans from his or her retirement account, without permitting you to review same?
  • Your spouse maintains complete and sole access to your bank accounts, or has post office boxes or safe deposit boxes to which you do not have access.
  • Your spouse reports a sudden decrease in income, but does not appear to be limiting his or her spending.
  • Your spouse has transferred property or cash to a close friend or family member.

One last warning sign deserves special consideration. It is very easy for many self-employed persons to inflate their business expenses or to under-report their income. For example, many business owners will suddenly take an increased proportion of their payments in cash after separating and fail to report that as income. Business owners can manipulate their earnings by deferring revenue or the payment of accounts receivable. In so doing, the business owner is in effect extending low cost loans to the customers of the business in order to reduce its earnings temporarily. An alternative measure is to inflate expenses by, for example, making advance purchases of equipment or inventory that will be needed in the future, but which exceed the business's current needs.

What should you do if you suspect your spouse is hiding information? The short answer is that you need a forensic accountant. The forensic accountant will analyze your spouse's lifestyle and reported expenditures, your spouse's financial information--such as his or her tax returns, bank statements, and public records--your spouse's phone bills and travel records, and the records of any business your spouse owns in part. By methodically combing through these records and applying expert analysis, a forensic accountant can often uncover hidden assets or the under-reporting of income. If you believe your spouse is hiding assets or income, you should speak with an experienced divorce attorney as soon as possible.


ABOUT THE AUTHOR

James Livesay is a family law attorney at Livesay & Myers, P.C. He is one of several Manassas divorce lawyersin the firm, handling separation, divorce, custody and support cases throughout Manassas, Prince William County and surrounding areas

James Livesay can be contacted by phone at (571) 208-1267 or or Visit Web Site



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