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How is your spouse going to hide assets?

Your spouse may not have legal justification for hiding assets, but he or she may break the law in an attempt to keep those assets from you. It happens. People take a lot of risks where money is concerned. This is especially common in contentious divorce cases, as your spouse may also do it to cause you direct financial harm.

It's important to understand how your spouse may attempt to hide assets. A lot of people count on having a spouse who is too disconnected from the family's finances to understand that the financial statements do not appear fair and accurate. They want you to overlook their attempts. You must understand what warning signs to watch for so that this does not happen to you.

With that in mind, here are a few common ways that people hide assets:

  1. Overpaying on bills or taxes. For instance, your spouse could pay $15,000 to a credit card company when you only owed $10,000. The bank that issued the card may then issue a check for $5,000 to your spouse. They could cash it elsewhere and hide the money, making it harder for you to see the withdrawal. In some cases, they even time things so that the refund doesn't come back until the divorce ends.
  2. Lying about income levels. This usually means underreporting what they earned for that year. Often, when looking for hidden assets, you just want to compare income tax statements against current accounts. This exposes missing assets. If the income tax statements are artificially low, though, your spouse can hide the corresponding assets.
  3. Buying items that you may undervalue. If your spouse has specialized knowledge about any particular field, they may use it to buy something that is worth more than you realize. For instance, they could buy a painting that is worth $100,000, knowing you have no knowledge of art. They'll then report it as being worth $10,000. If you accept that, they "hide" $90,000 of value.
  4. Creating fake loans with family members. These may also appear to be gifts. Your spouse could say that he or she "loaned" a sibling money to start a business, for instance. This takes the money out of your marital estate. After the divorce, though, that sibling could give the money back to your spouse. They never intended it to go to any business and simply wanted to hide it from you.

These are merely four examples, but they show you how far people may go to hide assets and defraud you during a divorce case. If you're worried that this is going to happen or already has, make sure you know what legal steps you can take to make it right.

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