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In New Jersey as in other states, both spouses party to a divorce must fully disclose all their assets and income streams. New Jersey is an equitable distribution state. This means the spouses must fairly divide their marital assets. In an effort to shrink the pool of marital assets, some spouses resort to hiding assets through a variety of methods. This may have the result of depriving the innocent spouse of what’s rightfully his or hers.
Fortunately, attorneys, forensic accountants, and judges can often spot many asset-hiding tricks a mile away. When caught, the offending spouse can face financial sanctions, and the judge may award the wronged spouse a greater share of the assets. That said, hiding assets is never worth the risk. But if you think your spouse might try, here are some common asset hiding tricks you should know about.
Transferring or Loaning Money to Friends or Family
Surreptitiously transferring or loaning money to friends or family is a common asset hiding technique. Your spouse would have to get the person on board with the ploy. But if successful, your spouse could move assets into their hands with the agreement they will transfer back after the divorce.
Cash Back Withdrawals
Getting $20 or $40 cash back with purchases here and there might not seem like much. But over the course of a divorce, which can stretch on for over a year, a spouse could effectively hide assets without you knowing. Receipts won’t break down what was paid for merchandise and what was cash back, so this method can’t be traced by looking at transaction records alone. It takes careful forensic work to spot and stop this asset hiding technique.
Overpay the IRS
Paying more in taxes or opting to apply this year’s tax refund to next year’s taxes is an easy way to hide assets, at least temporarily. If you suspect your spouse employed this method, make sure you have a forensic accountant take a look at your taxes. Also, make sure your property division addresses tax refunds. That way, if you do have a refund coming next year due to overpayment, you can make sure to stake your claim to your share of it.
Delay Raises, Bonuses, and Compensation
Some spouses work with their employers or business partners to delay compensation, such as raises, bonuses, and commissions. If such an agreement was off the books, you might not find out until much later, when you realize your spouse is making more money after the divorce. If you are in this situation, speak with a New Jersey divorce attorney about whether you can ask the court to take another look at your asset division.
Purchasing Big-Ticket Items
We’ve also seen some spouses make large purchases during a divorce with the intent of selling the items after the divorce to recoup the costs. For example, a spouse could purchase an expensive piece of art during the divorce but line up a buyer for after the divorce judgment was entered. If you fear your spouse may be wasting or dissipating assets with this intent in mind, an attorney can obtain a court order to prohibit both spouses from making big purchases while the divorce is pending. If one spouse disobeys the court order, he or she could face financial sanctions, and the judge may award a greater share of the assets to the innocent spouse.
Spotting and Stopping Asset Hiding
These techniques are just a few of many dishonest spouses use to diminish the marital assets subject to division. Sometimes they work, other times the innocent spouse finds out, but not always before it’s too late. Once a divorce is finalized, it’s very difficult to have the judgment set aside upon discovery of hidden assets. For this reason, it’s important to work with a savvy New Jersey divorce attorney from the beginning of your divorce. It’s far better to uncover hidden assets before your divorce finalizes, but you may need the keen eye of a divorce professional to do so.