How To Hide Finances In A Divorce

Hiding assets during a divorce is illegal and carries significant risks, including fines, penalties, and even jail time. Courts can also award the hidden assets, plus additional penalties, to your spouse. This information is for informational purposes only and does not constitute legal advice. Consult with an attorney for guidance on your specific situation.

Despite the risks, some individuals attempt to conceal assets. Here are some methods, followed by a discussion of the dangers:

Methods (Risky and Illegal):

• Underreporting Income: This involves misrepresenting your earnings, often through self-employment or businesses where income can be more easily manipulated. This might include delaying bonuses or commissions until after the divorce is finalized, or claiming personal expenses as business deductions.
• Creating Phantom Debts: Colluding with friends or family to create fake loans can falsely reduce your net worth. Documenting the “loan” with a backdated promissory note adds a veneer of legitimacy.
• Transferring Assets to Friends or Family: Shifting funds or property to trusted individuals with the understanding that they will be returned after the divorce is complete. This is often done with the intention of claiming the assets are no longer yours.
• Offshore Accounts: Stashing money in foreign bank accounts is a classic, though increasingly difficult, strategy. Jurisdictions with strict banking secrecy laws are often favored.
• Overpaying Taxes and Deferring Refunds: Intentionally overpaying your taxes to create a large refund due after the divorce is finalized. This effectively hides cash from the marital estate.
• Investing in Collectibles (Cash Purchases): Purchasing valuable items like art, jewelry, or antiques with cash makes them harder to trace. These items can then be hidden or moved easily.
• Delaying or Obscuring Business Transactions: If you own a business, you might delay profitable transactions until after the divorce or structure deals to minimize reported income. This could also involve artificially deflating the value of the business.

Why Hiding Assets is a Bad Idea:

• Discovery: Experienced divorce attorneys and forensic accountants are adept at uncovering hidden assets. They use techniques like subpoenaing financial records, conducting depositions, and analyzing lifestyle patterns to detect discrepancies.
• Legal Consequences: If discovered, you could face severe legal repercussions, including contempt of court charges, financial penalties, and even criminal prosecution for perjury and fraud.
• Damage to Reputation: Attempting to hide assets can irreparably damage your reputation and your relationship with your children.
• Unfair Settlement: Even if you succeed in hiding assets, the settlement you reach might be based on incomplete information, leading to an outcome that is ultimately unfair to both parties.
• Emotional Toll: The stress and anxiety of trying to conceal assets can take a significant emotional toll.

Instead of attempting to hide assets, focus on transparently disclosing all financial information and working with an attorney to negotiate a fair and equitable settlement. Honesty and transparency are always the best policy in a divorce proceeding.