Under New York state law, parties must disclose their finances during divorce proceedings. Failing to tell the whole truth and nothing but the truth in these circumstances is fraud, and yet many people take the risk and hide assets.
Why do people hide assets in divorce?
Secreting away bank accounts, assets and other financial vehicles during a divorce is more commonplace than many people think. Why do parties risk it? It’s almost always to mitigate alimony and child support obligations. Sometimes, pure spite plays a role.
Asset hiding techniques
When people try to hide assets in a divorce, they may use a variety of methods. Take a look at how divorcing individuals shuffle money, houses, boats, jewels and stocks off their books:
- False debt: Creating fraudulent debt obscures gains and makes it look like the person has fewer resources than they actually do.
- Third-party transfer: Transferring assets to a third party is a common obfuscation technique. However, examining past tax returns often unearths this action quickly.
- Denial: Some people flat-out deny that certain assets exist. If they’ve been hiding them for a long time, it may be difficult to catch. Again, tax records may serve as a revealing paper trail.
- Loss: Claiming lost assets is another popular move. In reality, the money or property in question is usually moved over to an unreachable business entity or given to a sympathetic ally who plans on returning the bounty once the divorce is signed and settled.
Hiding assets in a divorce is illegal, but it happens more often than you think. Understanding commonly deployed tactics may give you a leg up and help stop trickery in its tracks.