The beginning of finding assets in a divorce are the documents you collect from your client. For family lawyers it is not the only way to find hidden assets, but a thorough and complete list of documents is an excellent starting point because the “paper trail” can often reveal volumes of information. Some of the most important documents to obtain are: Credit card statements, loan applications trust documents and schedules of assets, financial records of businesses, accountant’s working papers, bank statements including checks and deposit slips, pay stubs and information about compensation packages, and tax returns.
Tax returns are an important place to start. When a person signs their return they are attesting that the information on the return is true and accurate. Certain sections of the tax return are more important than others.
- It’s important to review all sources of income in this section of the return and verify you understand them.
- Pay close attention to business income and income that might come from bank or investment accounts.
- Examine multiple years of tax returns to see if a spouse has dissipated assets in anticipation of divorce.
- Withholding: carefully examine whether the spouse is currently over-withholding expecting a large tax return after the divorce is finalized.
Bank accounts and loan applications are ripe with information about the location of assets and these are documents that should be some of the first examined in a divorce. A good starting place is the last five years of statements. You may ask: “how do I know what accounts exist, perhaps there are hidden accounts I don’t know about.” Start with accounts you know about and then look for evidence of transfers to or from other accounts. Also – large cash deposits might also be evidence of the existence of other accounts. Pay special attention to debits or withdrawals from accounts that appear suspicious. You can also look at cancelled checks deposited into accounts you may not know about. Frequently cancelled checks will have the name of the bank where it was deposited. Also look for spending which might indicate there are assets that you may not know about.
Loan applications are also a great place to look. Generally, the applicant must list their complete list of assets in order to qualify for the loan, or in the alternative they may have inflated the value of assets you know about to keep other assets secret. If the party uses an inflated valuation that could help in your favor during a distribution of assets.
Pay stubs are another great place to look. They might hide a hidden bonus or a recent increase in pay you may not know about. Pay stubs may also provide information about other important facts: commissions, retirement accounts, health savings accounts, reimbursement for employment related expenses, direct deposit of wages into an unknown bank account, and loans from retirement plans.
Keeping these things in mind when looking for assets in a divorce can yield great results.