Many divorces and separations involve accusations of infidelity. A spouse may have been carrying on a secret affair for years or be caught in trying to meet up with others. This secretive behavior can also extend to finances. When a spouse is carrying on an affair, they may be hiding money to cover-up the money they are spending on another person. A spouse may also be hiding assets in anticipation of a divorce to keep money from the other person.
Where a Spouse is Hiding Money
There are a number of ways to hide assets from another spouse. Especially when one spouse controls the family finances, the other spouse may be totally unaware of the family's financial value. However, a spouse can use sophisticated accounting methods to hide money from even the most financially savvy spouse.
According to a National Endowment for Financial Education (NEFE) survey, over 40% of adults who combine finances with a partner admitted to committing financial deception against their spouse or partner. Some common methods of hiding assets from another spouse when having an affair or considering divorce include:
- Not telling the spouse about a raise or salary increase,
- Opening a separate bank account in only one spouse's name,
- Putting money into the accounts of a family member or secret romantic partner,
- Putting valuables in a safety deposit box,
- Buying valuable artwork, antiques, jewelry, or collectibles,
- Understating business valuation,
- Phony debt or expenses,
- Unreported rent on property,
- Deferred salary increases or uncollected commissions, or
- Contributions to hidden benefit plans.
Discovering a Spouse's Hidden Assets
Discovering a spouse's hidden assets can be difficult for a spouse, especially when the secretive spouse goes through extraordinary measures to hide the money. It may take a financial accounting and forensic bookkeeping to look for evidence of hidden assets and identify and value those assets.
Some signs that a spouse may be doing some creative accounting before a divorce may include:
- Changes in spending habits,
- Changing passwords and account information for banks, investments, and retirement accounts, and
- Increasing secrecy about financial matters.
Busted for Hiding Money in a Divorce
Not surprisingly, a divorce judge in North Carolina will not look too kindly upon a spouse who is found to be hiding assets. A judge may sanction the spouse who is hiding money and may be more likely to find in favor of the other spouse when deciding how to fairly distribute property. Other methods of hiding money may also expose the individual to IRS penalties or even criminal fraud penalties.
Equitable Property Distribution in North Carolina
In a North Carolina divorce, property is divided between the spouses under an “equitable distribution” standard. Marital and shared property is generally divided equally between the spouses, or modified in a way that is considered fair to both parties. Each spouse's income is generally included as marital property, to be divided equally upon a divorce.
However, when one spouse believes they should be able to keep more money, needs to fund extramarital activities, or wants to financially punish the other spouse, there are ways to hide assets. If a spouse believes the other is attempting to hide money or is being secretive about financial issues, he or she should consider talking to an experienced North Carolina divorce attorney to discover the hidden assets before signing off on any divorce agreement.
Talk to an Understanding Divorce Lawyer in Shelby
An experienced North Carolina family law attorney can help protect your financial interests in a separation or divorce. This includes identifying all marital property, discovering hidden assets, and making sure you get what you are owed after a divorce. At Caulder & Valentine Law Firm, PLLC, we have represented spouses in Shelby, Gaston County, and across North Carolina to get their rightful property distribution and alimony support. Contact us today for a consultation.