Identifying Hidden Assets: Techniques and Limitations to Find Hidden Assets

Ideally, divorces should fairly split assets between spouses. This doesn’t necessarily mean dividing assets right down the middle or splitting them according to whose income bought them. If one spouse managed the household or raised children while the other was the primary breadwinner, their contributions should be acknowledged. However, not all divorces are friendly. Some require the help of a forensic accountant.

It is not uncommon to find that one spouse has hidden assets from the other. Failing to disclose assets during the divorce proceedings can lead to serious legal consequences. Here are some techniques used to find hidden assets.

Why do people hide assets?

If your divorce has been planned for a while, one spouse may fear having to “give up” more money and property than they would prefer. They may try to hide assets from their spouse, whether they transfer them to a third party or hide them behind fake documents.

When you suspect that your spouse has hidden assets from you, you’ll need to determine whether it’s worth it to engage in secondary discovery. A forensic accountant can comb through digital and paper trails to find suspicious behavior, but that will add more time and expense to the proceedings. In some cases, hiring a forensic accountant for additional discovery may not be worth the cost.

How forensic accountants discover hidden assets

There are many ways a forensic accountant and/or private investigator can track down hidden assets. Here are some of the most common ways:

  • Assets in a friend or family member’s name: One common way to hide personal property is to put in in someone else’s name. Your spouse may have “repaid” a non-existent debt, or put property in someone else’s safety deposit box.
  • Business expense and cash flow analysis: If your spouse owns a business, that can be used to hide assets as well. Your forensic accountant will comb their cash flow and expense records to make sure everything is above board.
  • Checking account statements: Cancelled checks can reveal whether someone has purchased real estate or another asset.
  • Income taxes: Income tax analysis can find hidden assets. For example, there may be discrepancies in reporting insurance proceeds, the sale of business assets, income from other states, side businesses and more.
  • Lifestyle analysis: Another way that forensic accountants and private investigators can track down hidden assets is to engage in a lifestyle analysis. Everything from the clothes a person wears to the car they drive can raise questions. If your spouse is living a more lavish lifestyle than their income can support, that can indicate hidden assets.
  • Loan applications: Loan applications can also be insightful. Where does your spouse claim their money comes from, and does it match with your knowledge?
  • Savings accounts and money market funds: Deposits and withdrawals can indicate the presence of other income sources. For example, there may be undisclosed stocks or bonds that pay out interest.

When you need help discovering hidden assets, the forensic accountants at Medina & Company Consulting, Inc. can help. Call us today to get started.