One of the main focuses of the divorce process is the division of the marital assets between the spouses. This requires the court, through the spouses and their attorneys, to take a thorough accounting of all of the marriage’s property. This can tempt some spouses to hide away assets for themselves rather than revealing them for division. Because the concealment of marital assets can be a problem, people going through a divorce should be aware of the different strategies others can use to hide assets, as well as how to spot them.
The strategies for concealing assets fall into two major groups: expense manipulation, making it look like more money is coming out than actually is, and income manipulation, making it look like less money is coming in than actually is. The prior post in this series covered some common expense manipulation strategies. This post will focus on the other type of concealment: income manipulation.
Income Manipulation Strategies
Income manipulation strategies focus on concealing income. This usually means deferring it until after the divorce has finalized. One common method of doing this is when a spouse coordinates with their boss to hold off on compensation or compensation increases during the divorce. For instance, a spouse who works in sales and is owed commissions may ask to have them paid only after the divorce is finalized, or the spouse may ask their employer to wait to promote them until after the process ends. This tactic can be difficult to spot when it happens, but it could possibly be grounds to modify support orders if it affects the concealing spouse’s income on a going-forward basis, like a promotion would.
Spouses who are also business owners have access to another means of deferring their payments. They can have their business hold off on billing customers for their services, which will decrease the business’ cash flow during the divorce. Then, after the divorce ends, they can send out their bills and pocket the money. Catching this requires a thorough examination of the business’ records to see whether the company’s customers are paying on time, as well as whether the bills are still going out.
Spouses looking to hide their money can also take advantage of their taxes. IRS regulations provide people with the option of receiving their refund as cash or banking it against taxes in future years. Most people choose the cash refund, but a spouse attempting to conceal their assets can leave the money with the IRS in the hopes that their husband or wife will not notice it, leaving them to reap the benefits of the banked money in future tax years. Alternatively, the IRS also allows spouses filing jointly to have returns deposited into an individual account, meaning a spouse could attempt to hide the refund in an account solely in their name. Spotting these strategies requires people to diligently review tax forms to ensure that any overpayment is accounted.
Speak with a Lawyer Today
If you are considering filing for divorce, contact a DuPage County divorce lawyer today. Whether you are concerned your spouse may attempt to hide assets, or you simply want more information about the realities of divorce, our experienced team can help you better understand the process.