Preparing for a high-asset divorce requires documentation and a thorough analysis of marital circumstances. Spouses who have enjoyed a higher standard of living during a marriage may feel especially concerned about the economic implications of an upcoming divorce.
In addition to ensuring that property division does not diminish personal holdings or trigger tax consequences, couples may also need to address the possibility of financial misconduct. Inappropriate financial behavior during a divorce is a common issue among higher-income individuals and those with more shared resources.
What are some of the most common ways that spouses hide marital property before a high-asset divorce?
1. Diverting marital income
People are not always financially honest with their spouses. They may have always underreported their income. Other times, they may fail to mention a promotion or raise and hide any increased income from a spouse. Diverting income from shared accounts is a common tactic in cases where the couple is already comfortable enough for that reduction in income to have minimal impact on the marital standard of living.
2. Acquiring hidden investments
For decades, offshore financial accounts were the most popular tool for hiding marital wealth and income before a divorce. However, international financial disclosure rules have made it more difficult for people to hide offshore holdings. They generally need to disclose those resources when filing tax returns, making it harder to fully hide them in the event of a divorce.
Currently, digital resources are a top way to hide income and assets from a spouse. Cryptocurrency and other digital assets can be difficult to track and almost impossible to access unless one spouse knows about the other’s investments.
3. Physically removing assets
Works of art, valuable collections and even antiques are easy for one spouse to move without the other noticing. Doing so can unfairly skew the property division settlement, as those assets may not make it onto an inventory of shared physical property.
One spouse might hide resources and a storage unit or take them to the home of a friend or family member. They might even use marital resources to furnish the apartment where they move after they file for divorce.
Those anticipating financial misconduct and those who are aware of potential attempts to hide income and assets may need to work with an attorney familiar with complex, high-asset divorces. Conducting a thorough financial review can help people locate hidden resources and push for a fair property division decree.