Attempting to hide assets in high net worth divorces is a serious issue that can lead to an unfair distribution of assets between spouses. It is illegal in Florida to conceal or transfer marital assets with the intent to avoid an equitable distribution in the event of divorce. Still, this doesn't stop some individuals from attempting to do just that.
If hidden assets are involved, the legal process might take longer and be more expensive, thus having a huge emotional and financial toll on the parties involved. There are penalties for hiding assets in Florida, with the court having the power to decide the best course of action in the matter. It's in both spouses' best interest to be open and transparent with their financial situation and work toward a just and fair settlement agreement.
Common Methods for Hiding Assets in High Net Worth Divorces
There are a few common methods individuals employ for hiding assets, such as:
- using offshore accounts
When using such a method, individuals select countries with strict bank secrecy laws where accounts are difficult to be accessed by other parties. However, the U.S. government has taken steps to combat such practices through various laws requiring foreign financial institutions to disclose information about U.S. citizens who hold accounts with them.
- taking out money from joint accounts
One of the spouses can take out large amounts of money with the intent to spend, hide in a different location, or make expensive purchases from joint funds with the intent to resell after the divorce is finalized.
- transferring assets to a third party
In such instances, a third party can be a family member or a friend, and the practice is to offer cash gifts or transfer ownership of property or stocks.
- disguising income or assets as business income
Uncovering such a practice usually requires the analysis of financial statements and the expertise of a forensic accountant since the culpable party can claim some assets are part of a business rather than of personal nature. The guilty party can also under-report income on tax returns or set up shell companies (businesses without operations) to hide money.
- using digital assets
Cryptocurrencies, online accounts, and digital collections can be hidden, forgotten, or overlooked. These digital assets have become an increasingly popular means for individuals to store wealth, and it's important to include them in the asset division process.
Uncovering Hidden Assets in High Net Worth Divorces
Uncovering hidden assets in high net worth divorces can be a time-consuming and complex process that requires a strong legal and financial team comprised of forensic accountants, financial investigators, or digital forensic experts. Below are some of the typical methods for uncovering hidden assets in high net worth divorces:
- through the discovery process
Both spouses are required to disclose all relevant financial information before trial, during the discovery process, where more straightforward attempts to hide assets can be uncovered. Such information comes in the form of income, assets, and debts and may include bank statements, loan documents, tax returns, and any other type of financial documents.
- through examination of physical assets
Real estate, vehicles, and other types of property can be examined, along with the individual's lifestyle, income, and expenditure, to identify any possible inconsistencies.
- through forensic accounting
Forensic accountants can review financial records such as business records, bank statements, and tax returns to determine any discrepancies or questionable transactions. Other more advanced methods to identify potentially concealed assets include data mining, tracing, and data reconstruction when analyzing financial information.
- using depositions and interrogatories
Both depositions and interrogatories happen under oath and are used to obtain information on assets and the potential contradictions and inconsistencies in a party's financial statements.
- using subpoenas
When a party is believed to be holding or having information regarding a hidden asset, a subpoena can be issued to compel disclosure of relevant documents or testimony about the asset's whereabouts.
- using technology
This method is used by digital forensic experts for tracking and uncovering digital assets, such as cryptocurrency and online accounts, by analyzing digital evidence.
Penalties for Hiding Assets in a Florida High Net Worth Divorce
It is illegal to transfer or conceal assets with the intent of eluding an equitable distribution during a high net worth divorce in Florida. Should a party be found concealing assets during divorce, the court is at liberty to impose penalties, such as:
- ordering an uneven distribution of assets
If one spouse was found concealing assets, the other party could be favored and awarded a bigger share of the marital assets than what they would have received if all assets had been disclosed properly.
- administering fines
The fines can be substantial, taking into account the financial harm caused to the honest party by the act of asset concealing.
- bringing criminal charges
If the act of concealing assets is considered a criminal offense, such as committing fraud or money laundering, it could lead to criminal charges and even prison time.
- applying sanctions and payment of legal fees
The guilty party can be ordered to pay for the legal fees of the innocent party, or the court can uphold a default judgment against the guilty party.
The Law Offices of Sean M. Cleary Can Assist with Uncovering Hidden Assets
It is advisable to involve a good high net worth divorce attorney in the early stages of divorce to ensure all marital assets are accounted for and the process is transparent for both parties. Our founder and leading attorney with The Law Offices of Sean M. Cleary can guide you on the best course of action, identify and uncover any potentially hidden assets. We can inform you of your legal rights and protect your interests throughout the entire high net worth divorce process.
You must be open and transparent with your attorney about your financial situation and provide them with all relevant financial information. This way, the discovery process can be efficient and effective, and all assets accounted for in the final distribution.