If you’re going through a divorce, keep a close eye on any financial accounts that you own jointly with your spouse. The money in these accounts likely qualifies as a marital asset, meaning that you have a right to it, and it needs to be split between both of you. Significant transactions prior to the divorce could be an effort to hide assets.
For example, perhaps you look at a bank account and realize that your spouse recently transferred $100,000 to one of their parents. You ask them what’s going on, and they tell you that they are just paying back an old loan that their parents gave them when they were in college. They had simply forgotten about it until now, but they felt that it was important to take care of the financial obligation before the divorce.
How does this hide assets?
This is a tactic for hiding assets because it is phony debt. Odds are that your spouse didn’t owe their parents $100,000. They may have invented the story entirely.
Instead, their plan is simple. They will transfer the $100,000 to their parents now so that they don’t have to split it with you. After the divorce is finalized, their parents will just give them the money back.
Phony debt isn’t the only way that people do this. They may make up stories about investing in someone’s business idea, for example. They may overpay bills, like tax obligations, hoping to get a refund after the divorce. Any major transactions can be a red flag.
If you do believe your spouse is hiding assets or violating your rights during property division, take the time to carefully consider all of the legal options you have at this time.
