Hidden Income and Hidden Assets in Tennessee Divorce
Finding income and assets hidden by a self-employed business owner parent preparing for a divorce can be very difficult even for forensic accountants. Hidden income and hidden assets can have a huge impact on a financial settlement including property division, alimony, and child support. A thorough investigation requires expertise and experience.
Is your spouse hiding assets in a divorce?
Is your spouse hiding income in a divorce?
Is your spouse hiding income to avoid paying child support?
If you suspect so, you must talk to an experienced Tennessee divorce and family lawyer who can guide you through the process of uncovering the truth. You may also want to hire a forensic accountant. This page summarizes and references strategies for uncovering hidden assets and income in divorces available on this and related sites.
First, look for “red flags.” Forbes.com author Jeff Landers quoted Memphis divorce attorney Miles Mason, Sr. throughout his recent article 21 Signs That Your Husband May Be Hiding Marital Assets During Your Divorce, posted March 20, 2012, listing the most common reasons for concern.
How to Find Hidden Assets in a Divorce
Discovering hidden assets can be very difficult. One of the first steps is to review tax returns. But, what if the tax returns do not reflect all of the spouse’s income? Then, compare the tax returns to financial statements shown to banks. A lawyer can also issue subpoenas to lenders for loan applications. A spouse can also issue Interrogatories to the other spouse to answer questions under oath. But, this is just the beginning.
Miles Mason, Sr. JD, CPA has authored The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, an easy-to-follow introduction to the world of forensic accounting and managing divorce litigation involving complex financial assets. The Forensic Accounting Deskbook is published by the American Bar Association Family Law Section and is one of the ABA Family Law Section’s bestselling books. Individuals going through divorce may also find The Forensic Accounting Deskbook helpful because the book is written for lawyers who do not have expertise in finance and accounting. The book’s central focus explains the roles performed by family lawyers and forensic accounting experts in litigation, as well as the process of litigating a divorce involving complex financial issues. A higher level of understanding of the financial aspects of divorce can only lead to making better decisions.
Several of the MemphisDivorce.com blog postings contain material from The Forensic Accounting Deskbook. For more in depth analysis and discussion, start with reading searching for hidden assets in Tennessee divorces and learn forensic techniques. Then, discover hidden assets and uncover hidden income in Tennessee divorces. Finally, learn how to prove a spouse is hiding income.
The Penalty for Hiding Assets in a Divorce
There can be a tremendous penalty for getting caught hiding assets in a divorce. Obviously, once found that asset will be divided in the divorce. It may be disproportionately awarded to the discovering spouse. In addition, the spouse uncovering the lie about the hidden asset or income, especially if under oath, may gain tremendous negotiating leverage for overall settlement. If the uncovered lie draws the ire of the trial judge, the spouse hiding assets can lose credibility. The spouse proving the lie can argue to the court: “If my spouse was willing to lie about a hidden asset, what else is a lie? How can the court trust what my spouse says?”
Divorce Income Determination
Determining income for setting child support and spousal support is very important. Income must be accurate and include all of the spouse’s income or the resulting child support will not be fair. Determining income for alimony purposes is equally important. Start with reviewing the tax returns and comparing that amount to income claimed on financial statements. Then, be sure to review brokerage statements for income from investments including dividend, interest, and capital gain income from all assets including tax-free investments. Finally, a spouse may need to resort to imputing income based on actual spending and luxury items purchased which may be inappropriate for those with lower incomes.
Imputing income means setting an income for a spouse to a higher amount than that amount claimed. This occurs most often if a spouse underreported income for divorce purposes. See uncovering hidden income in Tennessee divorces by imputing income.
If you are considering hiring a forensic accountant, but want to learn more about what services a forensic accountant performs in divorce, read how to dominate a divorce with a forensic accountant. A forensic accountant may also be needed for expert testimony if you are trying to prove a business owner is manipulating income by keeping retained earnings within an owned corporation rather than receiving distributions. For more information, see Update: Retained Earnings of Corporation, by Laura Morgan.
For child support and alimony (spousal support) in Tennessee divorce and child support cases, you may need to prove what a spouse can earn. See strategic use of vocational experts in Tennessee alimony divorce cases.
Hiding Money Using Off-shore Accounts and Sheltering Offshore Income
Is there money hidden in offshore bank accounts? Is your spouse hiding money offshore? Proving a spouse even has an offshore account can be difficult and sometimes impossible. Know that a U.S. citizen must pay taxes on income earned off-shore unless there is a specific exception. Is a divorcing spouse willing to commit tax fraud to hide the asset in the offshore account? If so, the search can be exceptionally challenging. But, if anything can be done to uncover this, forensic accountants know what can be done. In general, this means forensic accountants will review every piece of information and paper possible looking for the spouse to have committed that one mistake that leads to uncovering the offshore account. The Forensic Accounting Deskbook details the techniques utilized by forensic accountants when performing investigations into hidden assets and income, including suspected off-shore income.
WREG News Story: Investigating Hidden Assets & Income in Tennessee Divorce
Miles Mason, Sr. authored The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, published by the American Bar Association which discusses finding hidden assets and income at length.
Being Skeptical About Financial Information in Divorce
More Videos on YouTube Featuring Tracy Coenen, CPA, CFF and Miles Mason, Sr. JD, CPA:
- Documents Needed to Investigate Business Interests in a Divorce Case
- Areas of Financial Abuse in Divorce
- Divorce Financials: The Lifestyle Analysis and the Search for Hidden Income or Assets
References, Resources and More:
- Finding Hidden Income and Secreted Assets in Divorce by Miles Mason, Sr. (Published in the Georgia Bar Association Family Law Section Newsletter, Summer 2015).
- 21 Signs That Your Husband May Be Hiding Marital Assets During Your Divorce by Jeff Landers CDFA
- Divorcing Women: Here’s Where Husbands Typically Hide Assets by Jeff Landers CDFA
- Finding Hidden Income and Assets by Tracey Coenen CPA CFF
- Finding Hidden Income in Divorce Cases: Loan Applications by Tracey Coenen, CPA CFF
- Finding Hidden Income in a Divorce or Child Support Case by Tracey Coenen, CPA CFF
- Breakin’ Up Is Hard To Do by Robert Vance CPA, ABV, CFF, CVA, CFP