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There are many ways that spouses can hide and undervalue assets

A problem that plagues many high-net-worth couples who divorce is a spouse who hides income and other assets so that his or her true net worth can't be determined and divided appropriately in the divorce settlement. Some people begin hiding assets long ahead of asking their spouse for a divorce or in anticipation that their spouse will seek one.

There is some investigation that spouses can do on their own to determine if their partner is hiding money, such as looking carefully at bank, brokerage and credit card statements as well as tax documents. However, there are many more sophisticated methods of hiding or undervaluing property and other assets.

That's why many New York family law attorneys recommend that a forensic accountant be brought in to search for these assets if clients suspect that their spouse hasn't provided full and truthful disclosure. While this may not be an expense you want to add to the cost of your divorce, a forensic search for assets may pay for itself many times over.

There are numerous techniques for hiding assets. People who own businesses can conceal assets within the business entity. They may pay employees who don't exist or pay for services never rendered to make it look like the business has less money than it does.

Offshore accounts can be used to hide money because these banks have secrecy laws that make it difficult to locate them and identify the account holder. These are often discovered by reviewing a person's travel via their passport records.

There are other strategies that don't involve hiding assets but minimize net worth during a divorce. For example, someone may hold off on signing lucrative contracts and taking bonuses or stock payouts.

The more you know about your financial situation as a couple during your marriage and the more familiar you are with your spouse's business dealings, if he or she is the primary wage-earner, the less likely it is that you'll be unaware of attempts to hide or undervalue assets. However, even those who are diligent about such things can be in for a rude awakening during a divorce.

Talk with your family law attorney about whether it might be a good idea to bring in a forensic accountant to help ensure that you get a fair division of property.

Source: Association of Divorce Financial Planners, "Techniques for Discovering Hidden Assets and Unreported Income During the Divorce Process," Darlys S. Harmon-Vaught, Ed.D, CDFA, CFE, accessed Feb. 07, 2017

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