Even if you knew that your marriage was heading toward divorce for quite some time, the process can still be incredibly emotional. However, divorce is also a legal process that emotions should not rule. Not everyone takes this to heart, though. Hiding assets and money is often an emotional response to property division, and it might be more common than you think.
The point of hiding assets is to paint a picture of less overall wealth than a person actually has. Less wealth generally means that your soon-to-be ex-spouse may not have to pay as much child support or spousal support. You could also miss out on receiving your fair share of the marital assets, and your significant other will get away with more.
How do I know if there are hidden assets?
There are a number of red flags that indicate your spouse is hiding valuable assets. If your spouse did not file any tax returns, it could be because he or she purposely overpaid the IRS in the past. This means that, upon completion of your divorce, he or she could file taxes as single and the IRS would return the surplus.
However, you might not notice any problematic behavior. Even if you do, there is a possibility that you will not recognize the implications of what your spouse is doing. Instead, you may be relying on a gut feeling that something is wrong. Taking a look at your old tax returns can uncover much more than just overpaid taxes.
Red flags to look out for
Your spouse's W-2 form will contain a number of important details, including income. That form will also show how much he or she is withholding for income taxes and saving in workplace plans. It is possible that he or she is dumping extra money into retirement, health savings accounts or deferred compensation accounts, which lowers his or her income after taxes.
There are other options for hiding money if your spouse is an entrepreneur or business owner. Funneling money into a business is not uncommon. Business tax returns can uncover unusual spending or details about cash flow. In general, you should also take note if he or she changes spending habits, hides household financial information or frequently transfers money between accounts.
Do not lose out on your assets
Property division is an important part of divorce. The property and money that you receive during this process can establish how financially secure you are in the future. If your spouse is hiding assets, you may not be as financially secure as you thought.
In California, you deserve half of the marital assets. Getting your fair share is impossible when your soon-to-be ex is hiding assets. Even if you do your best to follow a paper trail for those assets, tracking down hidden property often requires an experienced party's touch. An attorney who is knowledgeable in family law and divorce might be able to provide the necessary guidance through this process.