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Dividing property during a divorce depends on having an accurate picture of the couple's finances. When one spouse fails to disclose assets, understates income, transfers property, or otherwise attempts to keep financial information from the other spouse, reaching a fair resolution becomes much more difficult.
Hidden assets can take many forms. Sometimes the issue involves an undisclosed bank account or investment. In other cases, a spouse may use a business, cryptocurrency, family member, or unusual financial transaction to make marital property harder to identify.
At Sarji Law Firm, we help Charleston clients investigate financial concerns during divorce and work to ensure that important assets and income are properly identified before property division and other financial issues are resolved.
Hidden assets are generally property, funds, or financial interests that one spouse does not properly disclose during the divorce process. A spouse may attempt to conceal the existence of an asset entirely or misrepresent its ownership or value.
Not every missing asset is the result of intentional misconduct. Complex finances, incomplete records, or accounts that have not been used recently can also lead to incomplete disclosures. However, unexplained discrepancies can justify a closer examination.
Assets that may become the subject of a dispute include:
Identifying these assets can be particularly important when the marriage involved significant property, business interests, or finances primarily managed by one spouse.
Financial secrecy can sometimes become more noticeable before or during a divorce. A spouse who previously shared information may suddenly restrict access to accounts or become unusually protective of financial records.
One suspicious transaction does not necessarily establish that assets are being hidden. Instead, attorneys may look at the overall financial picture and determine whether income, expenses, account balances, and reported assets make sense together.
Potential warning signs can include:
When these issues arise, preserving available records early can make it easier to determine what actually occurred.
Discovery is one of the primary tools available for gathering financial information during a contested divorce. Through formal legal procedures, a spouse can request documents and information relevant to the marital estate and other financial issues.
Our Charleston divorce lawyers can use the discovery process to examine financial records and investigate inconsistencies when there is reason to believe that important assets or income have not been fully disclosed.
Depending on the case, discovery may involve requests for documents, written questions, subpoenas, depositions, and other methods of obtaining information.
Documents that may be reviewed include:
Looking at several categories of records together can reveal transactions that would be difficult to identify by examining a single account.
Tax returns can provide valuable clues about a spouse's finances. They may identify sources of income, investment activity, business interests, real estate, and other information that can lead to additional records.
For example, reported interest or dividend income may point to a bank or investment account that was not included in a spouse's financial disclosures. Business income may also raise questions about ownership interests or compensation.
Tax returns are not always enough on their own. A person attempting to hide assets may fail to report certain information accurately, and some assets may not generate taxable income during a particular year.
For that reason, tax records are often most useful when compared with bank statements, business documents, loan applications, and other financial records.
Closely held businesses can create significant challenges in divorce because the owner may exercise considerable control over how income and expenses are recorded.
A business-owning spouse might be accused of delaying income, increasing questionable expenses, leaving money inside the company, or making payments that benefit the spouse personally. There may also be disagreements about the actual value of the ownership interest.
An investigation may examine payroll, tax filings, financial statements, accounts receivable, expense records, company credit cards, and transfers between business and personal accounts.
Business valuation professionals or forensic accountants may become involved when the finances are particularly complex. Their analysis can help determine whether reported income and business value are consistent with the underlying records.
Transferring property to another person does not necessarily mean the asset has disappeared for purposes of a divorce.
A spouse might transfer money to a relative with the expectation that it will be returned after the case is over. Another person might temporarily hold valuable property, or a spouse may claim that a suspicious payment was repayment of an old debt.
Transactions involving friends or relatives can therefore receive additional scrutiny, especially when they occur close to separation or divorce.
Relevant questions may include:
Banking records and testimony can sometimes help establish whether a transfer was an ordinary transaction or an effort to keep property outside the marital estate.
Cryptocurrency can create additional challenges because digital assets do not always appear on traditional bank or brokerage statements. A spouse may hold cryptocurrency through an exchange, private wallet, or other digital storage method.
That does not mean cryptocurrency is impossible to identify. Purchases and sales may leave financial records, including transfers between bank accounts and cryptocurrency platforms.
Emails, transaction histories, tax documents, device records, and other evidence may also provide information about digital assets.
When cryptocurrency is suspected, it is important to identify the issue early. Specialized financial analysis may be appropriate when substantial digital assets or complicated transaction histories are involved.
Not every Charleston divorce requires a forensic accountant. When the marital finances are complicated or significant assets appear to be missing, however, financial professionals can provide valuable assistance.
A forensic accountant can analyze records to identify inconsistencies, trace transactions, examine business finances, and determine where money moved over time.
Their work may involve:
An attorney and financial professional can work together to determine which issues require further investigation and how the findings affect the divorce.
Attempting to conceal assets can create serious problems during a divorce. Courts rely on accurate financial information when addressing property division and other financial matters.
The consequences will depend on what occurred, when the information was discovered, and how the concealment affected the proceedings. The court may consider evidence showing that a spouse intentionally withheld information or attempted to improperly dispose of marital property.
Finding hidden assets before the divorce is finalized can allow them to be properly addressed as part of the case. This is one reason suspicious financial activity should be investigated rather than ignored simply to finish the divorce more quickly.
The appropriate response depends on the evidence. A lawyer can determine what legal procedures may be used to obtain records, present the issue to the court, and protect the client's financial interests.
If you are dealing with concerns about hidden assets or incomplete financial disclosures during a Charleston divorce, our attorneys are here to help. We can review the financial records, use appropriate discovery tools, and investigate property or income that may not have been properly disclosed. Call us today or connect with us online to schedule a consultation.
