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The Risks of Hidden Assets for Divorcing Couples

Posted on in Division of Assets

hidden assets, divorce lawyer in IllinoisIt is common during divorce proceedings for one spouse to be more financially prepared than the other. Oftentimes, the spouse with the higher income starts diverting assets to hidden accounts that will not be declared in the event of a divorce. This asset manipulation benefits the prepared individual, while their partner is left with less than their due. These practices are both unethical and illegal, and affect all types of divorcing couples, from the wealthy to lower-income families.

Most Couples Have Only One Money Manager

Even in marriages where both partners are employed, one individual usually has more control over the finances than the other. Paying bills, managing accounts, investing, and saving is handled by the husband or the wife; not by both partners in tandem. As such, the spouse who manages the accounts and the financial resources has an advantage in the opportunity to manipulate assets.

Methods of Asset Manipulation

There are multiple opportunities for hiding financial assets from a spouse; methods vary on a case by case basis. Some of the most common tactics employed as asset manipulation include tax manipulation, investment manipulation and liquidity diversion.

Tax Manipulation

There are two types of tax manipulation that can occur if one spouse is considering divorce:

  • Overpaying: one party may overpay the IRS with plans to collect on the payment at a later date after a divorce has been finalized.
  • Understating Income: one party may intentionally understate his or her income on tax documents. While this risks being audited by the IRS and subjecting oneself to future penalties, this protects the perpetrator from equal asset division.

Investment Manipulation

Stocks, bonds, and other types of investments can be manipulated through the transfer of the account to family members, friends, or associates. After a divorce, the accounts can be transferred back and are not subject to division.

Liquidity Diversion

Hiding cash or other liquid assets such as bonds in secret safety deposit boxes or other secure locations is still a common method to ensure one spouse retains control of these assets in the event of a divorce.

Divorce is often a difficult process, especially if one spouse is actively trying to manipulate how joint assets are divided. Through advancements in technology, it has become harder for deceptive individuals to hide these assets from financial and legal professionals. Savvy divorce attorneys often partner with forensic accountants who have been trained to find hidden assets through specialized audit practices. Meet with an experienced Naperville, IL divorce attorney to review your case. Contact Pesce Law Group, P.C. today to schedule your complimentary consultation.

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