print view Page 1 of 3
Knowing Your Marital Finances
Separate Divorce Or Stay?
Should You Stay or Should You Go? Free Test Says What
Will Be Best
Stop Your Divorce
Fix Your Marriage. Get Free Advice Immediately.
Separation Agreement Form
A contract dealing with liabilities assets, insurance, and
Property Settlement Calculator Utilize our Business Tools
Settlements: Tips to Find Out if Your Ex Is
Hiding Potential Settlement Cash
If you're getting a divorce, your new best friend should be the If the spouse has a business,
Xerox machine. Why? Because you need to document every
dollar you and your soon-to-be ex-spouse have to ensure it's all the opportunity to hide assets
considered in the eventual divorce settlement. This means and income is magnified a
making duplicates of bank and brokerage account statements, thousand fold.
insurance policies and any piece of paper that details marital
If you don't keep close track of your shared property, you make it much easier for your husband or wife to hide
assets during the divorce process. It is usually the higher-earning spouse who tries to conceal assets. Typically,
that's still the husband. But either partner might have property he or she doesn’t want considered when it comes time
to divide assets.
There are many reasons people try to keep assets out of the marital pool. They range from simple greed to fear that
they won't have enough money after the divorce to feelings of betrayal or anger at the need to divide property, says
Stacy Francis, a certified financial planner, also known as a CFP, and Certified Divorce Financial Analyst, CDFA.
So if your marriage is ending, should you be worried about missing marital assets? Maybe. Maybe not."Some
individuals plan well ahead of time," says Nancy T. Mello, a CDFA and financial advisor with Merrill Lynch's Global
Private Client Group in Dallas. "They slowly start opening up accounts in their own names without their spouses
In most cases, however, such financial moves are relatively small scale. "It's not really common for a spouse to
intentionally hide assets the minute they think they might be going through divorce," says Lili Vasileff, president of
the Association for Divorce Financial Planners. "People do stash away a couple thousand in an account in case they
need to hire an attorney or PI. But it's not really big, big stuff. It's rare for it to be significant."
What's significant, however, is subjective. So it might not hurt to pay attention to your accounts and be aware of
indications that your partner is hiding marital assets.
COMMON HIDING PLACES
There is a multitude of ways assets can be hidden and divorce attorneys and financial advisers have seen them all.
A typical method is moving money from a joint account to an individual one, often opened under the person's
previous name. Or the new account could be under the partner's current name but be established at another bank,
possibly one in a neighboring town, says Vasileff, whose divorce planning services are detailed at
"You'd never see the statement if it goes to P.O. box or there's no interest generated to produce a statement," she
says. Other common hiding places and ploys, says Vasileff, include putting assets into a family trust, offshore
print view Page 2 of 3
corporation or shell corporation; buying collectibles or other items that retain value but are not liquid; and purchasing
insurance policies, cashiers checks and savings bonds.
Vasileff also has seen people make overpayments to IRS knowing they'll get the refund. And children, who already
are a point of contention in many divorces, sometimes get inadvertently involved in asset hiding. "You see very often
people start funding children's saving accounts," says Vasileff, typically in the form or educational accounts.
Francis, who is president of Francis Financial, Inc. in New York City, offers a few more ways a spouse may
undervalue or disguise marital assets or income: Income that is unreported on tax returns and financial statements.
This is especially true if the person receives frequent cash gifts or is paid in cash for services or goods sold.
Investment in certificate "bearer" municipal bonds or Series EE Savings Bonds. These do not appear on account
statements because they are not registered with the IRS. Collusion with an employer to delay bonuses, stock
options, or raises until a time when the asset or income would be considered separate property. Debt repayment to a
friend for a phony debt. Phony loans to relatives or friends that are to be repaid after the divorce. Expenses paid for a
girlfriend or boyfriend, such as gifts, travel, rent, or tuition for college or classes.
COOKING THE BOOKS
Then there's the proverbial "cooking of the books" by a partner who owns or substantially operates a jointly-owned
business. "If your spouse is a business owner, particularly in a cash business, your antennae should be up
immediately," says Vasileff. Francis agrees: "If the spouse has a business, the opportunity to hide assets and
income is magnified a thousand fold."
Some ways, says Francis, that marital assets can be manipulated in a business setting include: Skimming cash from
the business. Using the business to pay for personal expenses to reduce take home pay. Making salary payments to
a nonexistent employee, with checks that will be voided after the divorce. Paying money from the business to
someone close, such as a parent or girlfriend or boyfriend, for services that were never actually rendered. The
money then is given back to the deceitful spouse after the divorce is final. Delaying the signing long-term business
contracts until after the divorce. Although this may seem like smart planning, if the intent is to lower the value of the
business and or income it is considered hiding assets.
What to watch out for Vasileff says there are several indicators that your spouse might be misappropriating marital
1. Look at value of all your joint assets, if you know of them, and if the numbers look significantly lower, it could be
a signal that something untoward has happened.
2. Does your spouse's income suddenly seem lower? Some individuals can manipulate how they take their
income, for example, deferring income. "Be suspicious if your spouse doesn't want to talk about money at all,
especially if it's out-of-character avoidance," says Vasileff.
4. If your spouse travels internationally often or to certain cities regularly and spends a fair amount of time there,
Vasileff says it would not be unusual for your partner to have a bank account in that other location.
5. Are family members whom your spouse previously ignored now being lavished with gifts? Or has your
spouse decided to suddenly invest in a family business venture? "It's incredibly odd at the time of divorce for them to
be coming to you for assets," says Vasileff.
While an abundance of caution is usually good, especially when a marriage is unraveling, don't automatically go
looking for trouble, saysNoah B. Rosenfarb. Rosenfarb, a CDFA with Freedom Wealth Advisors in Short Hills, N.J.,
says he's seen "numerous cases where distrust leads one spouse to spend hundreds of thousands of dollars in
expert fees to try and find hidden money when none existed."
In one case, he recalls, a couple had worked in the shipping industry for company the husband founded. By the time
they were divorced, they had accumulated $20 million, but the husband had questions about the amount because his
wife had continually moved the business' money between multiple accounts. "He spent $400,000 in fees to
determine how the cash flow went into 80 mutual funds and 40 bank accounts," says Rosenfarb, a former forensic
accountant. "I spent all this time trying to prove to the husband that his wife had this need to keep moving money
print view Page 3 of 3
around, but did not take any out."
In another case, a wife was concerned by the couple's apparent living beyond their means. "The husband was in
businesses that involved cash and they were spending $50,000 a year more than they made," says Rosenfarb. "But
only $10,000 of it was from cash. The other was from debt, refinancing debt, that the wife didn't realize they had."
The bottom line, says Rosenfarb, is that when you have a concern, do investigate it. But be realistic. "Weigh the
costs of the investigation against the potential recovery," he says. Rosenfarb offers an example of a wife who
suspects that her husband has hidden millions of dollars kept off shore. It will cost $400,000 to $500,000 to
determine that. "But with a settlement north of $10 million, would she really get more?" asks Rosenfarb. "You have to
make an investment decision, not an emotional decision and look at your return on investment."