Category: Discovery

How To Win At Asset Hide And Seek

There are so many hidden asset scenarios when it comes to parties who are going through a divorce.  Often times one spouse believes the other has been divorce planning, or one spouse was historically in control of the parties’ finances and the other knows little to nothing about their assets or liabilities. Cases like these lead to concerns about hidden assets.  When preparing the marital balance sheet, it is imperative that appropriate documents be requested, and reviewed with a keen eye and attention to detail in order to find possible hidden assets (and debts for that matter!) which have not otherwise been disclosed. 

Below are some of the most common places where hidden assets can be found:

1. Personal and Business Income Tax Returns, Estate, Gift, and Inheritance Tax Returns (at least last 3 years). 

What to Look For:

Schedule A—Itemized Deductions. Property taxes and mortgage interest paid for real estate.

Schedule B—Interest and Ordinary Dividends. Bank and investment account interest and dividends, interest generated from ownership in business (reflected on a K-1 statement).

Schedule C—Profit or Loss from Business.  Businesses in which one or both of the parties’ children have an interest.

Schedule D—Capital Gains and Losses. Gains and losses from the sale of stocks, bonds, and real estate.

Schedule E—Supplemental Income and Loss.  Income from rental properties, royalties, partnerships, and S-corporations (which may show real property, business interests or royalties the client didn’t even know existed).

2. Paycheck Stubs.

Retirement accounts, insurance assets, HSA/flex accounts, profit sharing plans, stock plans and stock options.

3. Safes and Safety Deposit Boxes.

The parties may keep substantial amounts of cash and other assets in a safety deposit box or home safe.  Be sure to obtain a copy of the safety deposit box records showing activity in and out of the box and listing of current contents.

4. Checking Account Statements and Canceled Checks.

All checking account statements, whether personal, joint, held with a third party, held in the name of another person, business, and trust, along with canceled checks. Look for transfers made into or out of the accounts from unknown accounts, deposits being made from unknown sources, checks written to unknown payees, and gift card purchases.

5. Savings and Money Market Account Statements.

Don’t forget accounts set up for a “special purpose” such as Christmas, clubs, vacations, or annual/semiannual expenses, and accounts required by banks in tandem with a mortgage or loan.

6. Children’s Accounts.

These commonly include bank accounts, UTMA accounts, 529 accounts, trust accounts, and life insurance.

7. Employment Agreements and Employee Benefit Booklets.

Look for employer-funded incentive programs, such as stock-option grants, deferred salary increases, deferred compensation, and earned but uncollected bonuses and commissions.

8. Personal and Business Financial Statements.

Often times an asset or liability listed on a personal or business financial statement has not been disclosed in the divorce proceeding.

9. Loan Applications.

Loan applications provide a plethora of information regarding assets including account type (checking, savings, money market, CD, mutual fund, stocks, stock options, bonds, retirement, cash value life insurance policies, trust accounts, real estate, etc.), account numbers, and asset values.

10. Credit Card Statements.

Look for down payments, purchases, and the like for assets (furniture, electronics, guns, jewelry, etc.), payments toward expenses related to non-disclosed real estate (utilities, real estate taxes, furniture, etc.), reward point balances, and assets obtained from redeemed points.

Retain Essential Litigation Partners to find hidden assets in your case!

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