Your documentation is very important, learn what records you need to photo copy to assure you are treated fairly.
Learn how spouses can hide income or assets and where to look to find them.
California courts have an obligation to divide community property equally. This can only happen if the court knows what assets there are to divide. There are laws that require both parties to disclose all of their assets, debts and income during the divorce process. However, not all spouses are forthcoming and there are some clever ways people find to hide income or assets, both before a divorce is filed and during the process. Here are a few ways you or your family law attorney can check for anything out of the ordinary that might tip you off to a less than candid spouse.
• Get copies of back tax returns from your tax preparer or the IRS from the last five years. If you get them from the IRS you will need Form 4506. You can usually get old returns from the IRS in a couple of months. Your tax returns will show interest deductions and interest earnings which can identify real property and interest bearing accounts or capital gains. Working with an accountant, you can get a breakdown of assets you hold based on what has been reported on old tax returns.
• Get copies of all of the records from any bank, brokerage firm, credit union, or other investment institution to check for unusual transactions. This might include large cash withdrawals, ATM transactions, the purchase of traveler’s checks, or checks written to friends or relatives.
• Check for accounts opened as a custodial account for a minor child using the child’s Social Security number. This is fairly common and is an easy way for someone to have an account they can use for deposits and withdrawals without detection.
• Obtain copies of credit card statements which will reflect previous spending habits and may show suspicious transactions which can lead you to assets purchased without your knowledge.
• Order your credit report. This may reveal accounts of which you may be completely unaware or other suspect activity that could raise the red flag as to what may be going on with finances. You can get a free credit report from all three credit reporting agencies once a year.
• Look for evidence of payments made to friends or family of your spouse. This can indicate money is being channeled to others for return at a later time.
• Look for any investment in bonds for which there would be no account statement such as certificate “bearer” municipal bonds or Series EE Savings Bonds.
• Be aware that there are severe penalties for a spouse that hides income or assets in a divorce. In one case, a wife hid the fact that she had won the California lottery from her husband and failed to reveal that fact to him during their divorce. After it was discovered, the court awarded 100% of the lottery winnings to the husband for wife’s deception! (Marriage of Rossi (2001) 90 Cal.App.4th 34)
If you are concerned that your spouse may try to hide assets, it would be wise to get as much information as possible before filing for a divorce or as soon as you know your spouse has filed. Make copies of important documents such as tax returns, bank account statements, insurance policies, business records, pay stubs, investment portfolios, credit reports and any other documents that show assets or debts while you still have access to the documents.
Keep the copies with a friend or relative outside your home if you’re still living together with your spouse or domestic partner. It might also be wise to open a separate account only you have access to and deposit some of your joint savings into the account. Although this account will have to be disclosed and the money accounted for, you will not be in the position of having your spouse remove money from your joint account cutting off your access to cash until your assets can be divided.
By documenting for the court what assets there are to divide you will help assure that your community property will divided equally.
