It is not uncommon for couples to live and work together for decades to build strong finances and plans for the future. When divorce becomes a reality, however, these assets must be valued and divided. Unfortunately, one party might attempt to conceal various assets from his or her spouse prompting a thorough investigation to uncover hidden assets, properties or income sources.
How it is possible to hide assets between spouses?
- Completely denying the assets exist
- Secretly transferring the asset to a trusted third party
- Claiming the asset has been lost or destroyed
- Creating false debt either personally or through a company
Fortunately, forensic accountants and skilled attorneys can uncover these hidden assets through thorough investigation and detailed research. For many of them, the first step is to comb through past tax returns to uncover inconsistencies and outright untruths. Some areas of the tax return tend to be more valuable than others, including:
- Itemized Deductions: Schedule A of the tax return document is where the filer will list property or properties while determining what kind of deduction he or she is eligible for. Careful attention to this section can uncover assets or sources of income that weren’t disclosed anywhere else.
- Interest and Dividends: Schedule B of the tax return document is used to identify any asset that generates interest and dividends. Investigators can compare this list to the assets that had been previously identified.
- Profit or Loss from Business: Schedule C of the tax return document often includes a depreciation schedule which can ultimately reveal additional assets purchased through a business entity.
- Capital Gains and Losses: Schedule D of the tax return document includes gains and losses from investments such as stocks, bonds and real estate. Additionally, this schedule will list gains and losses from securities.
- Supplemental Income and Loss: Schedule E of the tax return document is used to report income and losses from all income sources. These sources can include rental properties and royalties as well as business entities such as partnerships and S corporations. Comparing these statements to known assets could potentially uncover hidden assets and undisclosed sources of income.
While examining tax returns are only one method of uncovering hidden assets, they remain a strong way to raise red flags. It is wise to keep clear financial records you can use to challenge your spouse’s statements. Do not hesitate to voice your concerns to an experienced legal professional.
