The divorce laws in California are predicated on the assumption that both spouses will provide a complete and accurate financial disclosure to the other spouse. This assumption cannot always be trusted if the divorce involves a high-asset couple. Humans being humans, some may find that the instinct to hide assets from the other spouse to avoid sharing those assets is strong. This instinct can lead one or both parties to wrongfully attempt to hide significant assets from the other party.
The assets most commonly hidden are cash, bonds, mutual fund accounts, cash value in insurance policies, annuities, stocks and bearer municipal bonds. Assets can be hidden in several ways. One of the most common gambits is the transfer of ownership to a third party, such as a foreign bank. Another common method is the creation of a fictional entity to take possession. Repayment of phony or exaggerated debts to family members is another common method. A spouse who is the sole owner of a small business may use such an entity to retain income that is, in fact, a marital asset.
Finding hidden assets usually requires the services of a person trained in the techniques necessary to locate the missing property. The spouse searching for the assets should prepare accurate and timely personal information about the other spouse and give this information to the asset finder. Such information should include all known addresses, Social Security numbers, known bank accounts and similar information.
The search should begin with the relatively low-cost discovery available in court, including interrogatories, depositions and subpoenas to banks and other potential depositories. Using this kind of discovery often produces information that will point the way to asset hiding places, such as off-shore accounts. The other spouse’s tax returns often contain helpful information, assuming the returns were not fraudulent when they were filed.
An experienced divorce attorney working with a forensic account or other professional trained to find hidden assets is usually the best method of locating and recovering hidden assets. Hiding assets is never a good idea and will often backfire on the spouse trying to conceal assets from their ex. Honesty in the property division process is essential to a fair outcome of a high-asset divorce.