You and your spouse never signed a prenuptial agreement. Now that you're getting divorced, you know he or she is nervous that you're going to get more than "your fair share."
People sometimes get obsessed with this idea. They fight endlessly in court to try to take more of the assets than are given to an ex. They spend an incredible amount of time, money and energy trying to "win" the divorce.
Some take it a step further. Even though it may be fraud and it may be illegal, they'll try to hide assets. They don't want to lose 50 percent of their assets, so they figure they'll hide half, split the rest, and really come out of it with a 75/25 split in their favor.
It pays to watch out for red flags and warning signs. Here are a few ways people try to hide what they own:
- Giving assets to family members. Your spouse sends $30,000 to a brother right before the divorce, claiming it's a business loan. Or your spouse pays a sister $10,000, saying it's for an old debt they both forgot about and just remembered. The real plan, of course, is for that family member to give the money back after the divorce gets finalized.
- Putting money in new accounts. Divorce takes time. Your ex spends a few months taking money directly out of your joint bank account and dropping it into a secret, personal account. In court, your ex never mentions that that account exists.
- Paying the IRS too much. Your spouse owes the IRS $5,000 almost every year. The year before the divorce, he or she pays $20,000 and tells the IRS just to hang onto it and use it for four years, thus lowering the total value of all controlled assets. In other cases, the IRS may issue a refund of the over-payment, which comes in after the divorce.
- Saying things are worth less than they are. You think your ex paid $10,000 for a painting. When asked, he or she suddenly "can't remember" and says it's worth just $1,000.
- Putting payments on hold. Your ex spent the last year working for a big client who pays $150,000 when the job gets done. He or she tells the client to hold on for now. After your divorce case ends, then the $150,000 payment comes in, months after it was originally scheduled. In similar cases, people sometimes turn down raises, promotions and bonuses, asking if they can get paid later.
These are just a few examples, and not everything that looks like fraud definitely is fraud. However, they help show you what types of behaviors you should watch out for as the case moves along.