California is a community property state, which means each spouse is entitled to half of the couple’s community property. Unsurprisingly, not everyone likes the idea of forking over half of their estate to their soon-to-be ex-spouse, especially if feelings of anger and betrayal are simmering. Some people get it into their heads to try and hide assets from their spouse. Methods for hiding assets range from the obvious to surprisingly sophisticated schemes.
Here are the seven most common ways that spouses hide assets:
1. Hiding Cash
It’s not sophisticated, but it is easy! If your spouse has been planning the divorce for some time or knew it could be a possibility, he or she could have simply started making regular cash withdrawals and socking the extra money away somewhere. To uncover this plot, check all of your bank account statements. If you notice an unusually high number of withdrawals or larger-than average cash withdrawals, your spouse might be hiding cash!
2. Buying New Possessions
Another common trick is for spouses to suddenly start buying expensive items, like furniture, artwork, antiques, expensive jewelry, watches, and more. If your spouse pays in cash for these items, he or she can either easily hide the items or vastly under-report their value with the intent to sell them later after the divorce. It isn’t unusual for a wife to discover that her husband suddenly bought all new furniture and artwork for his office right before a divorce!
3. Paying Off a Family Loan
If your spouse suddenly claims that he or she owes a friend or family member a large amount of money, get suspicious! Your spouse may pay off this large “loan” to a family member or friend with the tacit agreement that this money will be paid back after the divorce. If your spouse tries to play this card, demand to know what the loan was for and seek appropriate documentation. Your spouse may not even bother with the subterfuge of a loan and just simply give friends, family members, or a new romantic partner expensive gifts that will be returned after a divorce.
4. Not Reporting Cash Income
Many professions, especially in the service industry, receive cash payments that they are expected to report. If your spouse is a server, tour guide, hair stylist, masseuse, or someone else who receives cash tips or cash payments, it is extremely easy for them to simply under-report their earnings and stockpile the rest away. The same is true if your partner earns money from a hobby or side gig. Keep track of your spouse’s income if you can and see if it “magically” drops after you start talking divorce.
5. Delaying Bonuses or Promotions
If your spouse is due to receive a big promotion or bonus as work or finally get stock options, you’d better bet that he or she doesn’t want to share that newfound wealth with you. If he or she is planning a divorce or knows that divorce is imminent, he or she may collude with the boss at work to delay a promotion, bonus, or stock option award. It is very difficult for you to know that this is happening, but if you suspect it is a possibility, your attorney can legally compel your spouse’s employer to answer questions on the matter.
6. Delayed Invoicing and Salary Payments
If your spouse owns his or her own business, there are many ways that he or she can scheme to hide assets from you, aside from just buying new furniture for the office! One common way business owners hide assets is to delay invoicing for completed contracts until after the divorce is finalized. They may also hold off on signing contracts that include big upfront payments. Other common plots involve a spouse delaying their own salary payment or even creating a fictional worker and paying a salary to this worker with the intention of simply voiding the checks after the divorce.
7. Custodial Accounts for Children
This last one is kind of ugly, but it happens! Occasionally, a spouse will set up a custodial account in a child’s name. Since the money in the account is meant for the child, it wouldn’t count toward the couple’s community property. However, as soon as the divorce is complete, there is nothing to stop the parent who created the account from raiding it. If you notice your spouse setting up any custodial accounts for your children, be highly suspicious!
In many cases, it can be difficult to know if your spouse is hiding assets. If you suspect the possibility, then your divorce lawyer can refer you to a skilled private investigator or forensic accountant. Don’t let your spouse hide money and cheat you out of what you are entitled to! If you live in or around Orange County, then hire an attorney who will fight hard for a fair divorce settlement. Contact Bohm Wildish to schedule a consultation.