Beware of financial misstatements in divorce
by Jane Stack and Nancy D. Kellman | Jul 1, 2020 | Divorce
When a divorce is imminent, each party might automatically try to protect their own interests. For some, money becomes the primary concern. While this is understandable, neither party should allow it to lead to them taking illegal steps to try to hide assets. Being aware of how this might happen may help you to spot issues with the financial aspects of the divorce.
There are many ways that a person might hide assets if they’re going through a divorce. Some of these might start long before the divorce is announced because it’s easier to funnel money away from accounts a little at a time than it is to take lump sums.
- Cash withdrawals: Getting cash back from debit card purchases would enable a person to take a little bit of money out during each transaction, but the item on the account statement would only read for the store and wouldn’t show cash back.
- Passing money to someone else: This could be done by claiming they were paying the person back or that they were lending money.
- Delayed promotions or commissions: Trying to delay these isn’t always easy, but employers will sometimes allow employees to delay these. If your ex can get it delayed, they might be able to walk away with a nice amount after the divorce is finished.
- Overpayments: Paying too much on credit cards or even to the IRS might trigger a refund. In the case of credit cards, it would only work if they pay more than the balance and then request a refund. Overpayments to the IRS can be applied to the following tax year, which can result in a refund or an equal-dollar reduction in tax liability.
Scrutinizing the family financial records can alert you to issues with the money as you’re ending your marriage. In some cases, such as during a high-asset divorce or a complex one, a forensic accountant may be beneficial.