It is very common for spouses to hide assets from one another during a divorce. I am often asked how to know if your spouse is hiding assets from you. Of course, the truth is that one may never really know if assets are being hidden particularly if you are a spouse who has chosen to be uninvolved in the family finances for years. I have taken the signs below with my own commentary included from Jeffrey A. Landers, CDFA who is the founder of Bedrock Divorce Advisors, LLC (www.bedrockdivorce.com) and who often writes articles published in Forbes magazine. Here are some of those signs that over the years would indicate that you have a problem on your hands. If your spouse engages in the following:
1. Maintains complete control of bank accounts including online access to same and/or maintains separate accounts to which you have no access. If you’re reading this and don’t have access you need to take action so that you have full access to all bank accounts. If you get access you then need to start paying attention to the family finances. What is his money is also your money and vice versa regardless of who earned it.
2. Obtains a P.O. Box and/or maintains sole control over the mail so that you never know what is in the mail on any given day until after your spouse has retrieved the mail. This one is way too common. Usually it has to do with hiding credit card debt from a spouse.
3. Deletes large amounts of data from the home computer; i.e. all of a sudden the Quicken or Quickbooks program for the family or small business is gone.
4. Claims that the home computer which contained a lot of financial information has “crashed” and the hard drive is now missing; If the computer crashed you should still have the hard drive and then be able to retrieve this information.
5. Demands your signature on legal documents immediately without allowing you to have an opportunity to review and ask questions. I have seen this on refinancing of loans, tax returns, and deeds. Keep in mind that if you signed the joint tax return and then want to claim that your spouse hid assets from you or that what was reported on the return is incorrect you have a problem with the IRS. Read before you sign.
6. Proposes that you both execute mutual durable powers of attorney for finances for “estate planning” purposes. This is something that should be immediately revoked upon retaining your divorce attorney. Furthermore, if you don’t trust your spouse don’t give them a financial power of attorney for any reason.
7. Goes out of town for day(s) and/or hours when you don’t know where he/she is and when he/she will return and doesn’t return your calls while gone. This should be an obvious red light that your spouse is hiding something from you. It could be an affair, it could be related to money or it could be related to a secret lifestyle your spouse doesn’t want you to know about.
8. Claims that his/her business is failing now or that the bonus he/she receives every year is no longer going to occur now that you have announced you intend to divorce. This should be suspicious and in divorce court we look at the last three years, not only the year that you divorce.
9. Suffers an income decrease without a corresponding reduction in expenses. If the business is failing most business owners try to reduce expenses before calling it quits. If yours is still spending money that’s a problem.
10. Binges on unusual purchases of flashy items such as a car, house, vacations, and jewelry. This is extremely common and I assume the purpose is to get rid of cash so that the spouse can’t have any, but to me it seems like an obvious sign of trouble.
11. Reports a dramatic decrease in value of marital and/or business investments.
12. Has multiple cell phone numbers. Again, it’s either an affair, criminal activity, or financial misdeeds.
13. Exhibits childish greed and claims of entitlement. In divorce land it doesn’t matter how it’s titled if you got married and it was acquired during the marriage you are entitled to half.
14. Makes unusual purchases of toys or art that could be sold later.
15. Starts drawing on large amounts of debt; i.e. the home equity line of credit or a construction loan.
16. Is involved in drug abuse.
17. Gambles more frequently.
18. Opens multiple business or personal bank accounts without obvious reasons for having that many.
19. Has receipts for unexplained furniture, trips, and meals. This should be an obvious red flag. You are not and I repeat not being nosy by tracking down the receipt and figuring out where and why your spouse purchased unexplained furniture, went on the trip to Bermuda last month, and why he/she ate at a certain expensive restaurant.
I have to agree with Mr. Lander’s frequent piece of advice to divorcing women—think financially, not emotionally and get a good divorce lawyer.