Top 5 Places to Search for Hidden Assets during a Florida Divorce
In the state of Florida, all assets obtained over the course of a marriage are considered “marital property” and are subject to equitable division in a divorce. (These rules may not apply if a couple has signed an enforceable legal agreement that specifies another form of property division.) In some divorces – especially high-net-worth divorces – one partner may attempt to conceal marital property in an effort to reduce what they “lose” in divorce proceedings. If you believe your divorced spouse may be hiding assets, it is important that you conduct comprehensive due diligence and fight for your fair share. Below, we review and the top 5 places to look for hidden assets during a Florida divorce.
1. Suspicious “Gifts” to Loved Ones
While it can be unpleasant to think about, some partners will coordinate with friends and family members to deliberately conceal funds and valuable assets. These schemes involve someone “gifting” an asset – say, a luxury vehicle or a substantial amount of cash – to someone they know and trust. The “gift” is not an actual gift in that the recipient does not intend to keep the asset permanently. Instead, they effectively “hold” the asset in their physical and sometimes legal possession until the divorce has concluded. After the divorce is over, the loved one transfers the asset or assets back to the original owner.
Be wary of any abrupt gifts to friends or family members, especially if they are closer to your divorcing spouse. You may need to look closer if the gift seems unwarranted or unusually lavish. You should also be concerned if a divorcing spouse claims they are suddenly paying a debt you never heard about, as there is a decent chance that the debt is only an excuse to facilitate a temporary and illicit transfer of funds.
2. “Missing” or Reduced Cash Flow
Wages are considered a form of marital property when they are earned during the marriage, and partners will sometimes work with their employers to conceal their pay once a divorce is imminent. One scenario might involve a partner asking their employer to withhold paychecks, bonuses, or other lucrative incentives until the divorce has concluded. This allows the partner to effectively “stockpile” wages that will not be counted as marital property.
Pay close attention if you notice that your divorcing spouse is not receiving their regular rate of pay or if they do not earn a bonus that they had previously mentioned or usually collect. Divorcing spouses may say their employer is struggling and that they were forced to take a temporary pay cut. Do not accept these claims at face value.
3. New Purchases
All forms of physical property are subject to equitable division in divorce proceedings if the assets were acquired during a marriage. However, an asset occupying physical space can be tougher to locate than a financial asset that can be digitally tracked. Put simply, a physical asset can be literally hidden. Partners can take advantage of this dynamic by using marital funds to purchase physical property that they then take steps to conceal. For example, someone might “convert” cash into expensive jewelry, which they then hide in a crate and ship to a storage unit. If their partner is not carefully tracking spending, the new purchase and converted marital property is easily missed and could be overlooked in divorce negotiations. If the concealing partner manages to keep the asset hidden until the divorce is over, they can recover the lucrative property and often reconvert it until liquidable cash.
Many new purchases can seem perfectly justifiable and innocent, but be sure to keep a close eye on any unusual or suspiciously-timed spending. Try to track where new purchases are physically located and inventory any lucrative assets.
4. New Accounts
You will likely already be aware of and monitoring all of your and your divorcing spouse’s separate and joint bank accounts. Some partners will attempt to create a secret and separate account in someone else’s name. If you have a child, they may attempt to exploit their Social Security Number to open an account in their name. They could also cooperate with a friend or loved one to open a separate account where marital financial assets can be stored.
Thoroughly investigate any suspicious transfers of funds and be on the lookout for separate accounts that may or may not be in your divorcing spouse’s name. Once a new account has been established, the partner will generally start transferring funds. You will likely notice if a major chunk of money is suddenly missing, which is why most perpetrators of this scheme will transfer small amounts over an extended period of time. You may not immediately notice the discrepancy until a large amount is unaccounted for.
5. Family Business
Partners often attempt to hide assets through their family business. Any business-related gains that occurred during a marriage are generally considered marital property, even if one partner has no direct interest or ownership in the company. A divorcing spouse may use several strategies to manipulate the valuation of the business.
A divorcing spouse can hide assets in a family business by:
- Creating and “paying” fake employees or contractors. A common tactic involves a businessowner generating faux employee records and printing checks that will be voided once the divorce is over. Similarly, a businessowner might pay a real person – usually a close friend or relative – for services that have not actually been rendered. In these cases, the recipients will typically return their “payment” after the divorce concludes. Both of these approaches make it seem like the company has fewer resources than it actually does, while the paper trail creates the appearance of legitimacy.
- Delaying the initiation of growth opportunities. A business may be on the verge of closing a major deal, merging with another company, or substantially expanding its operations. A businessowner embroiled in a divorce might choose to deliberately delay finalizing these opportunities – each of which has the potential to greatly increase the company’s value – until their divorce has concluded.
- Undervaluing company assets. A businessowner may intentionally distort the value of company assets. In addition to obvious assets like equipment and commercial real estate, be sure to carefully analyze the value of furnishings and decorations in offices and other less prominent spaces.
- Manipulating disbursements. Depending on the structure of the business, a businessowner may be able to coordinate with a partner, co-owner, or a board of directors to facilitate a delay in the payment of raises, executive bonuses, and other incentives.
Discovering the whereabouts of hidden assets can be difficult, especially if your divorcing spouse has resorted to sophisticated schemes. In many cases, hiring a professional forensic accountant can help protect your interests. Attorney Bernstein has over three decades of experience handling matters of family law and can provide the investigative services you need to locate and recover hidden assets. Dale L. Bernstein, Chartered Law Office is also extensively familiar with how to navigate high-net-worth divorces and can provide the comprehensive representation you need to secure a fair and favorable outcome.
If you believe your divorcing spouse may be hiding assets, do not wait to schedule an initial consultation by contacting us online or calling (727) 312-1112.