The decision to file for divorce is never easy. It comes with all sorts of uncertainties, questions and worries, including the question of what your life will look like afterward.
To land on your feet, you’ll want a fair settlement. Whether you were the primary wage earner or tended to the home, you contributed to the marriage, and you deserve your share of the estate. To that end, Arkansas law demands an equitable division of all marital assets. But what happens when someone tries to hide assets or disguise their wealth?
How hidden assets can cheat fair property division
First, it’s important to understand what equitable division means. It doesn’t mean that all property is divided equally. Only marital property is subject to property division. Certain gifts and items that one side owned prior to the marriage may be immune. And “equitable” doesn’t necessarily mean “equal.” For example, the courts may consider large disparities in incomes as they split up a couple’s assets and debts.
However, to make their decisions, the courts rely upon a full and clear understanding of the couple’s finances. When one party hides or disguises assets, that throws off the whole picture. Courts that work from faulty data are unlikely to divide assets as well as if they had good data.
Common ways spouses try to hide or disguise assets
Even though it’s illegal for people to try hiding their assets during a divorce, many do it anyway. Whether they act from greed, distrust or vengeful motives, many people offer the court a false financial picture. Rooting out their hidden assets can be tricky—especially amid all the other concerns of high-asset divorces with diverse portfolios—but it’s likely easier than the cheating spouses suspect.
If you think your spouse is concealing financial information, your legal team may bring in forensic accountants, business valuators and other experts who can dig for the truth. They know where to look, and as Forbes notes, most spouses resort to several common tricks, including:
- Denying or erasing the asset. Among some of the ways someone may try to deny their assets are underreporting income on tax returns, tucking away cash or making purchases that are easy to overlook.
- Transferring ownership to a third party. The assets are then typically returned after the divorce is settled.
- Overpaying taxes. This basically results in your spouse hiding the money with the IRS until it’s time for the tax return.
- Creating fake debt. Together with friends or family members, your spouse might create some debts that need to be repaid. But since these debts are phony, the truth is the repayments will all be returned.
- Slanted business valuations. People whose net worth are largely rooted in their businesses may underreport their values or exaggerate their debts.
Again, the forensic accountants, business valuators and other experts who work with high-asset divorces know how to look for all these types of hidden assets.
What hidden assets mean for your divorce
Because the fairness of your property division may directly impact your future quality of life, it’s important that the courts get a clear look at the real financial picture. When you suspect your spouse is trying to distort that picture, there are people who can help you dig up the truth.
The effort and delays may be frustrating, but getting the truth may help you get the settlement you deserve. And the courts tend to look less favorably upon those who try to cheat them.