If the spouse has a business, the opportunity to hide assets and income is magnified a thousand fold.
Know Marital Finances when You Split
Settlements: Tips to Find Out if Your Ex Is Hiding Potential Settlement Cash
By KAY BELL
"You'd never see the statement if it goes to P.O. box or there's no interest generated to produce a statement," she says. Other common hiding places and ploys, says Vasileff, include putting assets into a family trust, offshore corporation or shell corporation; buying collectibles or other items that retain value but are not liquid; and purchasing insurance policies, cashiers checks and savings bonds.
Vasileff also has seen people make overpayments to IRS knowing they'll get the refund. And children, who already are a point of contention in many divorces, sometimes get inadvertently involved in asset hiding. "You see very often people start funding children's saving accounts," says Vasileff, typically in the form or educational accounts.
Francis, who is president of Francis Financial, Inc. in New York City, offers a few more ways a spouse may undervalue or disguise marital assets or income: Income that is unreported on tax returns and financial statements.
This is especially true if the person receives frequent cash gifts or is paid in cash for services or goods sold. Investment in certificate "bearer" municipal bonds or Series EE Savings Bonds. These do not appear on account statements because they are not registered with the IRS. Collusion with an employer to delay bonuses, stock options, or raises until a time when the asset or income would be considered separate property. Debt repayment to a friend for a phony debt. Phony loans to relatives or friends that are to be repaid after the divorce. Expenses paid for a girlfriend or boyfriend, such as gifts, travel, rent, or tuition for college or classes.
COOKING THE BOOKS
Then there's the proverbial "cooking of the books" by a partner who owns or substantially operates a jointly-owned business. "If your spouse is a business owner, particularly in a cash business, your antennae should be up immediately," says Vasileff. Francis agrees: "If the spouse has a business, the opportunity to hide assets and income is magnified a thousand fold."
Some ways, says Francis, that marital assets can be manipulated in a business setting include: Skimming cash from the business. Using the business to pay for personal expenses to reduce take home pay. Making salary payments to a nonexistent employee, with checks that will be voided after the divorce. Paying money from the business to someone close, such as a parent or girlfriend or boyfriend, for services that were never actually rendered. The money then is given back to the deceitful spouse after the divorce is final. Delaying the signing long-term business contracts until after the divorce. Although this may seem like smart planning, if the intent is to lower the value of the business and or income it is considered hiding assets.
What to watch out for Vasileff says there are several indicators that your spouse might be misappropriating marital money.
1. Look at value of all your joint assets, if you know of them, and if the numbers look significantly lower, it could be a signal that something untoward has happened.
2. Does your spouse's income suddenly seem lower? Some individuals can manipulate how they take their income, for example, deferring income. "Be suspicious if your spouse doesn't want to talk about money at all, especially if it's out-of-character avoidance," says Vasileff.
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