While the law requires both parties in a divorce to disclose all assets and sources of income (declared in the New Jersey Case Information Statement), unfortunately, not all spouses are completely forthcoming regarding financial matters. Suspicious that your spouse is hiding assets or extra income? Conducting a lifestyle analysis or requesting a formal accounting of financial records may be necessary in some cases to get a clear picture of personal and joint finances. But for many couples, a spouse’s hidden assets may actually be hiding in plain sight.
Where to start looking? Begin with your lifestyle. If your married life consisted of going on lavish vacations, eating at fancy restaurants, and driving luxury cars, think about how much these things cost — and then compare them to your actual financial records. For example, if your tax returns show a reported annual income of $50,000, but yet it seems like you live the life of someone making five times this amount, it could be a red flag that all is not what it seems.
The more details you can put together, the more helpful it can be when discussing your suspicions about hidden assets with your attorney. How much do your monthly expenses total? Does your spouse keep cash around the house (or is there a safe or safety deposit box you don’t have access to)? Does there always seem to be money when your spouse what to buy a big ticket item? Does your spouse receive mail from banks or credit card companies that you are not aware you have an account with? Or, if you are no longer living together, do you remember these things taking place?
An even more obvious way to look hidden sources of income is to double-check your own joint personal bank accounts. If your spouse is claiming $50,000 in income for last year, but a total of $100,000 passed through the account, where did this money come from? Of course, there could be a completely plausible explanation. A spouse who is self-employed, for example, but who doesn’t follow the (preferred) practice of keeping a separate business account, may be running all money through your account to pay legitimate business expenses. If this is the case, you should see evidence of this popping up in canceled checks, and should be able to see on the business expense portion of your taxes that it matches it up with you see in your bank account.
How forthcoming is your spouse about sources of income? Money coming in that goes beyond the usual paycheck can include:
– Overtime and extra duty,
– Pension/retirement payments,
– Social Security payments,
– Disability income,
– and Unemployment compensation.
If you believe your spouse made money through one or more of these means, but you are not seeing it declared anywhere, it’s best to let your attorney know. Other red flags that may need more explaining from your spouse? Look for business expenses most people pay out of their own pocket, but then get reimbursed by their companies. These can include company car rental, business trip meals and entertainment, club dues, tuition reimbursement. Do you see these being paid out of your joint personal account? Then a reasonable question becomes, if there is a reimbursement check, where is it being deposited?
Some spouses can be cocky about undeclared income or keeping extra cash in a safety deposit box, even telling their spouse, “you’ll never be able to get your hands on this.” If you do have a conversation like this, by all means, take notes! In the event of a formal inquiry into hidden assets, this type of information can be invaluable when it comes calculating alimony, child support, division of marital property, and other money-related divorce matters.