What Happens When My Spouse Is Hiding Assets In Colorado During A Divorce?Sponsored Answer
Divorces happen for a variety of reasons, and every marriage is different. But a common occurrence among divorcing couples is the loss of trust. When mistrust exists, spouses often suspect the other party is hiding marital assets. However, not all spouses are dishonest about financial matters. It is challenging to determine when the mistrust is justified and when the facts do not justify the suspicion.
While the ability to conceal money or property isn’t easy, it’s not impossible for an unscrupulous spouse. For high net worth couples, dividing assets can be more complicated, especially when a business is involved. That’s why it’s crucial to work with an experienced lawyer to ensure that property is not overlooked.
How Do Spouses Hide Assets?
A knowledgeable divorce attorney understands the many ways that dishonest partners try to conceal marital assets. Four common methods are:
- They deny the asset exists
- They claim the asset was lost
- They transfer ownership to a third party
- They create false debt to offset the value
While proving that your spouse has used any of these or other methods to conceal assets can be challenging, there is often a paper trail. If your former spouse is particularly good at covering their tracks, finding these documents on your own may be difficult.
Finding The Paper Trail To Hidden Assets
A knowledgeable lawyer, working with investigators in some instances, can spot red flags by examining personal and business financial documents, such as detailed bank records. Looking at tax returns is one way to spot undisclosed assets, including:
- Itemized deductions relating to property or income not disclosed elsewhere
- Assets that generate interest and dividends
- Depreciation schedules for additional assets purchased by a business-related entity
- Capital gains or losses from investments, such as securities, bonds, stocks and real estate
- Distributions from rental properties, partnerships, royalties and S corporations
In addition, business entities issue certain tax documents, such as K-1s or 1099s, that show up on IRS records even if they’re not included in a spouse’s financial disclosure. The IRS is your friend in these cases, but having a lawyer who knows where to look is crucial.
Additional Hiding Places
Gathering documents and locating other potential hiding spots as early as possible – hopefully before the divorce process begins – is essential for easily identifying marital property. It’s not uncommon for many of these assets to “disappear” once the proceedings begin. For instance, a spouse whose business handles a great deal of cash can sometimes hide money.
Some of these locations may be in your home, such as safes, filing cabinets or desk drawers. Another possible site is a bank safe deposit box. However, money wired to an offshore bank account can be challenging to locate due to different record-keeping standards in other countries. Tracking undisclosed assets can also be difficult for spouses with business or real estate holdings set up under different names.
What Happens If Assets Are Discovered Later?
Colorado law requires both spouses to fully and honestly disclose all assets and debts once the divorce process begins. However, if you discover your former partner omitted marital property after the divorce is finalized, a five-year “lookback period” exists. You must be able to prove that the assets are significant and were excluded from the original disclosure.
If a court decides these items should have been disclosed, you can request that the property division order be revised. Lookbacks may also be allowed if an asset was revealed, but there was a substantial misrepresentation of its value. Lookbacks are typically not allowed when financial records were supplied but not reviewed, or when the documents were not requested.
Working with an attorney who understands this complicated process is essential to assuring that any property division is based on a complete picture. Whether you are the spouse suspected of concealing assets or the spouse who suspects that concealment has occurred, an experienced attorney is vital for vigorously representing your interests for the best possible outcome.
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