Relationships are often built on trust. A revealing survey demonstrates this does not always apply to finances. The National Endowment for Financial Education found that, among American adults who combine finances with a partner, about four in every 10 admit to “financial deception.”
This behavior might remain benign – a small purchase here and there in support of a hobby, for example. But such financial infidelity takes on a new shape under the harsh light of divorce. Some spouses will choose to hide assets ahead of property division as an attempt to tip the scales in their favor. Here are five common strategies a deceitful partner may employ.
Expanding their collection
The value of $10,000 is inarguable. But the value of a piece of art or a new addition to a hobby collection? That is easier to obscure. A spouse trying to hide assets may quickly buy up these types of items and understate their value, rather than allowing the cash to speak for itself.
Delaying extra compensation
High-level employees and executives often receive additional compensation, such as a bonus or stock option. They may also be in line for a hefty raise. In certain cases, a spouse my ask to have these income boosters delayed until after the divorce, so the additional funds do not count during property division negotiations.
Tax laws are complex. An unscrupulous spouse could use this to their advantage. One common tactic is to overpay the Internal Revenue Service, then apply the surplus to future tax bills. They could also underreport their income.
Falsifying business expenses
If your spouse owns a business, they may try to use it to reduce their assets. This could include “paying” a salary to an employee that doesn’t exist, or intentionally overpaying for services rendered.
Coordinating with close friends and family
A friend or family member may also be in on the deceit. Your spouse could loan one of them money, with an agreement to have it paid back well after the divorce is finalized. It can also work the other way, with your spouse paying back a debt that does not exist – only to see the money returned at a later date. Stock transfers may be manipulated in a similar manner.
Hiding assets is illegal, but people may go to great lengths to do so. Uncovering these dishonest tactics requires a thorough investigation by parties who know where to look. By taking these steps now, you can ensure property division is done according to the law: equitably.