Finding Hidden Income and Assets
Undergoing the divorce process is already daunting. On top of the divorce process, suspicions that your estranged spouse is hiding any sort of income or assets can add to the stress. The light in it all is that you have options.
If you are considering divorce or are already in the process in Essex County or Middlesex County, Massachusetts, and you feel your spouse is hiding assets or income from you, contact us immediately at Lamb & Lamb, P.C., for trusted legal guidance.
Our team of family law/divorce attorneys can help you use every legal tool available to uncover hidden assets or income so as to achieve a truly equitable distribution. We proudly serve clients in the communities neighboring Salem, including Danvers, Beverly, Lynnfield, and Peabody.
The Basics of Divorce in Massachusetts
Divorce in Massachusetts can be no-fault or fault-based. For a no-fault divorce, you only need to cite that your marriage has been irretrievably broken. For a fault-based divorce, you must cite a ground for divorce, which could be cruelty and abuse, desertion for one year or more, adultery, impotency, excessive use of drugs or alcohol, failure to provide support and maintenance, or a prison sentence of five years or more.
Obviously, a fault-based divorce is going to require a courtroom battle if the other spouse challenges the reason, thus driving up attorney’s fees, court costs, and the time to conclude the dissolution. In a no-fault divorce, the other party cannot challenge anything. You’re simply stating that it’s time to move on.
In either type of divorce, there must be a division of assets and debts. The Commonwealth of Massachusetts is not a community property state, where everything is divided 50/50. Instead, Massachusetts is an equitable distribution state with a legal wrinkle.
In most equitable distribution states, assets are divided between marital and separate property. Marital property is any asset (or debt) acquired during the time of marriage. Separate property is anything acquired before marriage, by gift, or sole inheritance during marriage. However, this is not the process in Massachusetts, everything is lumped together, though it is still subject to equitable distribution and not a simple 50/50 formula.
Given this unique interpretation, it is not unusual for one party in divorce proceedings to try to hide assets, income, or both. This is especially the case if one spouse or partner handles all the finances during the couple’s time together. The other person then becomes what is known as the “out-spouse,” that is, out of the financial loop. This can complicate the discovery of assets during divorce.
Division of Assets in Massachusetts
The above discussion introduced the concept of equitable distribution, but what exactly does this entail? If a judge is deciding the issue of dividing assets – remember, there is no distinction between separate and marital assets – then the following factors, among others, will be weighed:
The length of the marriage
The conduct of each party during the union
The age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties
The future financial and occupational prospects of each spouse in the future
The contributions of each toward the acquisition and preservation of assets, or the appreciation of value in their respective estates
The contributions of each as a homemaker to the family unit
Of course, the spouses outside of court can voluntarily agree to a divorce settlement regarding all issues, including division of assets and debts, custody of children, child and spousal support issues, but if one spouse suspects the other of hiding assets and/or income, rather than reaching an agreement, the suspicious spouse should seek legal counsel and try to uncover anything hidden.
Commonly Hidden Assets
If one is resourceful enough, probably just about anything can be hidden, even if it is an obvious physical asset like a car or boat. When it comes to investments and financial interests, one spouse can simply use a post office box and then hide any statements or financial records in a safe deposit box.
For tangible assets such as vehicles, boats, etc., the asset could be sheltered in another party’s name and possession. Of course, to purchase these assets would require cash outlays or credit arrangements, which could be ultimately traced.
When it comes to hiding income, a spouse could simply delay receiving a bonus or commission check until the divorce is completed. If the spouse owns and operates their own business, matters can get even more intriguing. Payroll checks could be written to nonexistent employees to “reduce” cash flow and cash on hand. The owner could also simply skim profits and write them off as expenses. If a lucrative deal is at hand, it could be delayed until after the divorce.
Uncovering the Truth
In complex matters, you may have to turn to a forensic accountant to examine all available financial records, but more likely, you need to work with an experienced family law/divorce attorney and employ what is known in legal circles as the discovery process. Discovery is used in civil and criminal trials to learn what the other side knows so that both parties can prepare for the courtroom on an equal footing.
Discovery can consist of various steps, including:
ISSUING INTERROGATORIES: Interrogatories are questions in a written format sent to the other party, in this case, to the spouse who is suspected of hiding assets or income. The spouse is required to answer the questions.
REQUESTS FOR ADMISSION: Similar to interrogatories, requests for admission are questions posed to your spouse that they must answer. A question might be, “Is it true you hid a commission check so your spouse wouldn’t know about it?”
DOCUMENT DEMANDS: Also, your attorney can legally request your spouse to turn over tax returns, financial statements, loan applications, and account statements for checking, savings, retirement, and investments.
INSPECTION DEMANDS: Your attorney can demand the right to see what’s in a safe deposit box, other location, or resource.
TESTIMONY UNDER OATH: Perhaps the most dramatic step is to require your spouse to appear and testify under oath. This is not generally done in a courtroom but in your attorney’s office or conference room. A court reporter will be on hand to make an official verbatim record of the proceedings.
A Strong Advocate for You and Your Rights
Divorce is never a pleasant experience. No one gets married expecting it to end in acrimony or mutual accusations, but it happens from time to time. If you’re involved in a pending or current divorce in or around Salem, Massachusetts, reach out to us at Lamb and Lamb, P.C. to help you resolve any issues you face, including a spouse who may be hiding assets or income.