Clues to Hidden Income and Assets in Divorce – Fraud Files Blog

I often get asked how someone will know if their spouse is hiding income or assets in a divorce. Sometimes it is obvious when a document is discovered or information is leaked by someone in the know. But what if you just have a “feeling” that something isn’t right?

In working with divorcing couples, I’ve found that there are often some telltale signs of trouble. A gut feeling with some objective information is often enough to warrant further research and investigation. What are some of the common clues that I have seen to indicate hidden income and assets?

• We are suddenly poor: The income-earning spouse has an unexplained decrease in compensation and/or you have gone from regularly having extra money to suddenly having a low balance in your bank account. Beware of the possibility that your spouse is deferring income… having commissions, bonuses, or other compensation withheld until after the divorce is over.

• Unexpected downturn in business: A self-employed spouse reports that the business has taken a turn for the worse. Is it really coincidence that this happened precisely when the divorce is pending? Your spouse may be diverting customers and income from the business, or intentionally (and maybe fraudulently) increasing the expenses of the business to make it appear less profitable.
• Using a post office box or other private address to receive mail: Have bank, credit card, or investments statements stopped coming to your home? Why would your spouse want to hide these statements? It is possible that money is being spent improperly or diverted to secret accounts.
• A history of deception: If your spouse has a history of lying or concealing details of financial matters, consider this a huge red flag for your divorce. This behavior is only likely to intensify, and it is not unreasonable to assume the worst.

You can read more about these issues in my book Lifestyle Analysis in Divorce Cases: Investigating Spending and Finding Hidden Income and Assets, published by the American Bar Association.