The Shady Ways People Hide Income and Assets in a Divorce
“What ATM Withdrawals? Oh, those were just for lunches and stuff…”
More like stuffing cash in their pocket! This strategy is fairly common. One party will start taking small (and sometimes large) cash withdrawals leading up to a divorce, hoping the other party won’t notice. Instead of using the cash, they stockpile it and “forget” to mention this new asset of cash-on-hand that’s been accumulated. Or they claim they’ve spent all the money but cannot provide proof of expenditures. Sometimes folks have opened a new account in their name only or “loaned” the cash to a friend. A similar method of hiding cash is to get cash back with grocery purchases and throw away the receipts.
Now You See it… Now You Don’t!
Some people will literally HIDE assets (also known as STEALING!). For example, imagine if a couple has a lot of jewelry that’s been accumulated over the years from various sources. Prior to inventorying, one party takes a few select items from the jewelry box and hopes the other party doesn’t notice anything is missing. Like magic, they have padded their property division. *Poof!* A spin on this tactic is to take large assets and “sell” them to a friend or family member for a nominal amount.
Getting Cosmetic Surgery or Taking a Lavish Trip and THEN Requesting a Divorce
It’s crazy, but it happens! One party will elect to get a new smile or some other cosmetic enhancement, or takes an expensive solo trip and the couple pays the costs. Once completed, that party initiates divorce proceedings. It’s hard to divide a pearly white smile or days previously spent on the beach.
“I just don’t know why I haven’t gotten a pay raise these past couple of years?!”
Self-employed parties have many ways to attempt to hide income and assets in their business; so much so, it deserves its own blog. But what about a W-2 employee? No way you can hide income there, right? WRONG. If a party requests that their employer defer salary increases or bonuses before and during the divorce, it equates to hidden income. Some have also tried overpaying the IRS by sending a lump sum over-payment, or increasing their withholding as a way to make their net pay appear to be less than it is, creating a “savings account” that is eventually refunded. Similarly, if a party is wanting to hide evidence of a pay increase, they will split their direct deposited income into two different accounts and hope no one notices.
Over-Paying Credit Cards with Zero or Low Balances
If a credit card is overpaid and the credit balance sits for a while, the credit card company will refund the overpayment, usually in the form of a check. The party that overpaid the credit card can then take that check and cash it. To the other party, particularly those who aren’t close to the household finances, it just looks like credit card debt was paid.
Don’t Be Shady!
There are many other ways folks have tried to hide assets, the list goes on and on. But let’s be absolutely clear: hiding assets and income in a divorce is morally abhorrent and highly illegal. The courts don’t look kindly on those who attempt these strategies and can impose large monetary penalties to a party caught in such devious acts. And the reason we know about these tactics is because people have been caught!