Finding Hidden Assets in a Florida Divorce

Quick info: How do I find hidden assets in a Florida divorce case?

“Hide the Ball” is a common game in cases where the property will be divided. If one spouse does not know of the hidden assets – the court will not be able to properly divide those assets.  A husband or wife can hide bank account statements, cash, jewelry, and many other types of assets.  A systematic approach is required that involves getting all visible statements or lists and cross-checking to detect the inward or outward flow of money to unidentified locations. Those unidentified locations are investigated and identified. Then repeat the process over and over again.

Introduction

The equitable distribution of property in Florida (property division) involves the complicated process of identifying all assets, income sources, and liabilities; characterizing each as marital or separate property; and reaching an equitable division of the marital assets.  Because Florida is an equitable distribution state, the division of assets and debts will be based on a number of factors intended to bring fairness –  but this does not mean that it will be a 50-50 division.  This process can be complicated even in an amicable divorce, but when one of the parties attempts to hide and divert marital assets or run up inappropriate debts, the process becomes far more difficult.

Hide the Ball – The Game of Concealing Assets

“Hide the Ball” is a common game in cases where property will be divided. If one spouse does not know of the hidden assets – the court will not be able to properly divide those assets.  A husband or wife can hide bank account statements, cash, jewelry, and many other types of assets. Believe it or not, many people feel free to lie in court (sarcasm intended!). When one spouse tries to hide the ball and conceal assets, the other spouse has a huge challenge. The “out spouse” frequently is the party who faces the challenge of exposing the other spouse’s waste of marital funds or hidden marital assets.  The term “out spouse” refers to a party that may have had nominal or no involvement in household financial matters or the running of a family business.  Because the out spouse is fairly detached from household and/or business financial affairs during the marriage, this spouse may not have an accurate understanding of the extent of the marital assets in terms of the specific assets and debts that comprise the marital estate nor recognize their value.  This means that the spouse who was detached also may not know how to acquire the documents and financial records that are essential to evaluating an equitable distribution of the marital estate. Most spouses implicitly trust each other during an intact marriage. And many times one spouse or another will become the default keeper of the financial records during the marriage. Unfortunately, this natural progression works directly against a trusting spouse in the case of a future divorce.

Required Disclosure of Assets and Finances

Both parties to a divorce have a court-imposed duty of financial disclosure toward the other spouse regarding financial matters, such as real property, personal property, retirement accounts, household furnishings, bank accounts, antiques, collectibles, business interests, and other forms of property and income.  When the parties have a high net worth, the estate may include assets that are more difficult to value like stock options, artwork, antiques, or collectibles.  Sometimes one spouse will have a fairly high level of sophistication regarding financial matters so that they are more able to hide assets or cash in a business entity or through sham financial transactions.

When spouses disregard their obligation of financial disclosure toward the out spouse during a divorce, they are not proceeding ethically or legally.  Our experienced Florida divorce attorneys use the full range of discovery tools to expose hidden or diverted assets/income, such as:

• Demands for production of financial documents – Florida court rules define procedures known as a “production request.”  A production request is a formal document filed with the court and sent to the other spouse that includes a list of requested documents. The spouse that receives the production request normally must comply with the request within a relatively short time.  But like everything in divorce court, a production request is many times the beginning of a new battle. If one or the other spouse is determined to hide assets or prevent the other side from finding assets, they will do their best to resist compliance with production requests. A frequent type of court hearing is a Motion to Compel. At that hearing one side or the other will request the judge sign an order forcing a spouse to disclose documents or information.
• Deposition of a spouse – A deposition is an “in your face” type of proceeding conducted outside the courtroom. Everyone shows up at the office of a court reporter for a court sanctioned question and answer session. There is no judge present but the deposition is still an official proceeding. A deposition is an opportunity for the spouse that is trying to find hidden assets to conduct detailed, intensive questioning of the other spouse. Many depositions can expose lies or inconsistencies.  Most depositions provide sufficient information to conduct a more detailed search for assets.
• Requests for admission or denial of key financial facts – A Request for Admission puts someone on the line to either admit or deny an important financial detail. If someone denies a fact and it is later proven – they are on the hook for certain attorney fees.
• Interrogatories – (written questions) directed toward a spouse probing financial information – Financial interrogatories are overused and overrated in divorce cases.  Interrogatories consist of a series of written questions sent to the other spouse. They typically have 30 days to provide the answers. Interrogatory answers tend to be well planned out and end up being almost useless to the case.
• Subpoenas requesting financial information – The ultimate tool of attorneys –Record Subpoenas are documents directed toward employers, financial institutions, medical providers, and businesses.  Whoever receives a subpoena is under a court order to provide the requested records.  Before we can send out a subpoena, we must know where to send it. That information is developed through the other, above methods.

While aggressive use of the discovery process can provide critical information necessary to uncovering hidden assets or the inappropriate waste of marital assets or income, we carefully analyze tax returns, profit and loss statements, bank records, and 1099 documents for discrepancies, improper transactions, undisclosed income streams and improper liquidation of marital assets.  Our Florida divorce lawyers’ evaluation of financial records may derive as much information from what the documents do not say as what they do.  While we develop strategies to expose hidden assets based on a joint evaluation with our client weighing cost vs. return, we may also employ financial experts, including forensic accountants, asset tracing services, and private investigators under the appropriate circumstances.

The Most Common Form of Financial Disclosure

Every Florida divorce case requires each spouse to file a financial affidavit. The affidavit is a frequently overlooked goldmine of financial information. A financial affidavit is a detailed listing of each spouse’s income, expenses, assets, and liabilities. Each line item is valued and specifically identified. In any case with hidden assets, financial affidavits tend to be sloppy and they also tend to contain inconsistencies.  For a spouse that is hiding money, the following issues tend to come up in their financial affidavits:

• Reported gross income that obviously does not match up with their payroll
• Reported expenses that do not exist
• Assets that are grossly undervalued
• Net deficits every month that does not result in building debts
• Debts run up on credit cards with no supporting documentation

We typically examine the financial affidavit and compare it to other information received through the above-listed mechanisms. A financial affidavit is a snapshot of finances at a point in time. But that person’s income and spending habits should properly inter-relate with the financial affidavit. Many people lie in court documents – but many of those same people do not thoroughly think out their lies. They hide assets but then file documents that show a mismatch between their different lies.  A sharp eye can pick out inconsistencies that are ripe for further detective work.

The Ultimate Weapon in the War Against Hide the Ball

The ultimate weapon is the most obvious weapon – a smart attorney, and a client motivated to help when and where requested. The key to finding hidden assets is to spot inconsistencies in financial statements or patterns in other financial dealings. Most efforts to hide or conceal assets and money produce occasional “blips on the radar.” An examination of tax returns and bank statements can often point to odd, unexplained transactions. Trend charts can sometimes point to percentage increases or decreases in expenses that are not supported by the disclosed income.  To find hidden assets you must use a combination of all available tools and then take a sharp eye to the results. It is not easy to find hidden assets but for many situations, it can be financially rewarding for the spouse fighting for a fair division of property.

If you have questions about property and debt issues involved in the Florida divorce process, we invite you to schedule a free consultation with one of our Florida property division attorneys. The challenge to find hidden assets presents many difficulties for our attorneys. As your trusted counselor, it is our job to help you decide how much money and time to devote to the project versus the potential financial gains from finding hidden assets. But in the end, you will always get the most bang for your buck by retaining an attorney that is aware of all the issues in this article. Our attorneys can help you with this difficult area of work that is common to many divorces.

Author’s note from Attorney Howard Iken: In a Florida divorce case, finding hidden assets can be challenging. Spouses may hide bank statements, cash, and other assets. To uncover hidden assets, a systematic approach is needed, involving cross-checking statements and investigating unidentified locations. Various methods like demands for documents and depositions can be used. Financial affidavits and expert assistance are also valuable. Uncovering hidden assets ensures a fair division of property in the divorce.