How to Find Hidden Assets in Divorce
Unfortunately, some spouses attempt to hide assets before or during a divorce in order to avoid sharing them with to their soon-to-be ex. However, divorcing spouses in all states can use powerful legal tools, called “discovery,” to help them find hidden income and other assets (discovery is explained in detail below).
The first step in dividing assets during a divorce is to create a complete financial picture of all of the assets owned by each spouse. Generally, these assets will be categorized as “marital” (property acquired during the marriage), “separate” (property acquired before the marriage, after separation, or by gift or inheritance), or “comingled” (where you’ve mixed marital and separate property together, for example, in a bank account or retirement fund). These are general rules; the laws of your particular state will dictate exactly how property is characterized.
Even though you may not have ownership rights in your spouse’s separate property, it’s important to account for all of it because (depending on your state’s laws) a court may consider the value of both spouses’ separate property when deciding how to divide marital property and debts.
Finding Assets When You’re the “Out-Spouse”
If your spouse handled the bookkeeping during your marriage, and you played little to no part in tracking finances, you are what some attorneys refer to as the “out-spouse.” This simply means that you don’t have immediate access to or knowledge of financial information, but your spouse does.
If you’re the “out-spouse,” your first course of action should be to simply ask your spouse for copies of all financial records. If your spouse can and will produce all records, the information gathering process might not be too painful. Alas, this is rarely the case. Sometimes, your spouse simply can’t find the records. If so, the two of you can work together to gather information. With online access to just about everything nowadays, it’s easy to get account records. You can also send joint requests for records to mortgage companies, banks, retirement plan administrators, and other third parties.
Unfortunately, many spouses refuse to produce information because they’re hiding assets. Finding hidden assets in divorce can be challenging, especially for non-attorneys. This article explains what a basic search should entail, but we’re not suggesting that you should conduct every search yourself.
If you believe your spouse is hiding assets, you may want to contact an attorney with experience in asset search and investigation. Even if you don’t suspect your spouse is hiding assets, it’s wise to consult with an attorney to ensure you’re asking the right questions and if appropriate, using the discovery methods listed below.
The Divorce Discovery Process
If you don’t think your spouse will voluntarily disclose all financial information in your divorce, you or your attorney will need to use a formal, legal process to get information and documents. Attorneys and judges refer to this as the “discovery process.” The discovery process provides several methods of getting information, which vary slightly from state to state, but for the most part include all of the following:
Document demands. Your attorney can ask your spouse to produce specific documents, such as tax returns, financial statements, loan applications, and account records.
Written questions called “interrogatories” or “requests for admission.” Using these discovery tools, your spouse must answer questions in writing, or admit specific statements that you believe are true.
Inspection demands. You can ask to inspect property like a safe deposit box or wine collection.
Testimony given under oath. In what’s called an oral deposition, you, your spouse, and your lawyers appear before a court reporter; your spouse is sworn to tell the truth and must answer questions asked by your attorney.
The discovery process is a good way to get financial information from an uncooperative spouse because the court has the power to compel compliance. For example, if your spouse fails to produce documents, you can ask a judge to order your spouse to do so. If your spouse disobeys the order, a court may punish your spouse by imposing a “sanction,” which can include monetary fines or even a judgment against your spouse on a particular issue.
A deposition is a particularly good way to get information from a dishonest spouse. Anyone who lies under oath during a deposition can be charged with perjury. This may be just the right kind of pressure your spouse needs to tell the truth about hidden assets. Typically, you should wait to depose your spouse until you’ve obtained some financial records. This way you can ask your spouse questions about records and information you’ve already examined.