Hidden Assets and Financial Misconduct in a High-Net-Worth Divorce

Hidden Assets and Financial Misconduct in a High-Net-Worth Divorce

Date Posted: May 15, 2023 12:55 am Author: Scott A. Levine

Hidden Assets and Financial Misconduct in a High-Net-Worth Divorce

Hiding Assets: A Common Problem in High-Net-Worth Divorces

High-net-worth divorces involve marital property consisting of real estate, family businesses, company shares, cryptocurrency, expensive jewelry and antiques, and other valuable items.

Distributing marital assets is a vital aspect of any divorce. In an equitable distribution system, judges divide high-net-worth marital assets starting from an equal division presumption. Then they consider various circumstances that justify spouses getting an unequal share, aiming at fair (equitable) distribution.

Things get complicated when one or both spouses hide assets and engage in financial misconduct to avoid equitable distribution. This article will discuss common problems associated with hiding assets in high-net-worth divorces (including statistical data), the importance of financial forensics in uncovering hidden assets, and the role of an experienced divorce attorney in protecting your property.

The Statistics of Hiding Assets in a Florida Divorce

According to the statistical data, 31% of married adults in Florida have been dishonest about finances. Around 6% of survey participants admitted that they engaged in some financial misconduct during their marriage.

Florida family attorneys confirm that hiding marital assets is not uncommon in the Sunshine State. More than 45% of surveyed lawyers reported that they experienced an increased number of cases involving financial misconduct in the past couple of years.

Such a rise in hidden asset cases comes from the ease of concealing financial records in today’s digital age. Also, many people are changing their beliefs and core values due to ongoing cultural shifts. Couples no longer want to lose their identity and financial independence once they enter the marriage. Although deceptive and dishonest, hiding assets appears as a way of preserving individuality.

The Role of Financial Forensics

Uncovering hidden assets in a high-net-worth divorce is unthinkable without the help of financial forensic experts. Due to affluent couples’ complex financial arrangements (shares across multiple companies, merging businesses, financial holdings, crypto investments, etc.), tracing funds and detecting financial misconduct is daunting. Only well-versed financial experts with experience in court proceedings can help bring the truth to the light of the day.

Common Types of Financial Misconduct in a High-Net-Worth Divorce

High-net-worth couples want to keep as much marital property as possible during a divorce. Some of them plan for a divorce scenario for years. Below are the most common types of financial misconduct allowing spouses to hide assets:

  1. Offshore accounts asset transfer. Wealthy couples have various motives for hiding assets. In addition to tax evasion purposes, when people conceal assets from the government, one or both spouses often seek ways to hide assets from each other. One of the methods for doing so is transferring assets to offshore accounts. An offshore bank account is outside the holders’ country of residence, enabling them to shield their funds from their home country’s tax payments. Couples aspiring to avoid equitable distribution also use offshore accounts to hide assets from their spouses and the court.
  1. Assets undervalued. Another form of financial misconduct used to hide assets is undervaluing assets. Presenting assets’ value in financial records and divorce disclosure forms lower than their intricate (market) value is a fraudulent behavior some spouses use to conceal property from their partners during a divorce. In addition to being punishable by law (as a contempt of court or felony) and leading to fines or imprisonment, undervaluing assets prevents equitable distribution of marital property during high-net-worth divorces.
  1. Assets concealment. Instead of undervaluing assets and trying to hide property partially, some spouses in high-net-worth divorces choose to hide assets by selling them to third parties using fictive contracts without disclosing the transaction to their partners. Third parties (family members or friends) return such property to its initial holder after the divorce is final.
  1. Income misrepresentation. Sometimes, spouses conspire with their employers to hide assets during the divorce. For example, the employer can withhold one spouse’s paycheck until the end of the marriage so that the salary (whole or in part) remains out of the calculation during marital property division.
  2. Sham businesses. Typically, sham businesses and transactions have the purpose of avoiding paying taxes on a profit or social security contributions. In high-net-divorces, spouses often create companies to hide assets. Instead of performing regular activities, they use sham companies to transfer assets under the guise of business transactions.
Methods for Preventing Financial Misconduct and Uncovering Hidden Assets

Methods for Preventing Financial Misconduct and Uncovering Hidden Assets

Getting a fair share in marital property requires constant vigilance during a divorce. That is especially true in high-net-worth divorces where the stakes are high. Preventing financial misconduct and uncovering hidden assets requires efficient methods. Take a look at the most common:

  1. Gather financial records. Each spouse in a divorce process must disclose their status, including all their assets. Work with your attorney to ensure the other party reveals tax records, bank statements, stock portfolios, cryptocurrency accounts, and other financial documents. Failing to make truthful financial disclosure can lead to fines or even imprisonment. Use the legal requirements to your advantage. Get a clear picture of your partner’s financial position since that is a starting point in preventing financial misconduct in high-net-worth divorces.
  1. Hire a financial forensic expert. Hiding assets has never been easier. Unlike hundreds of years ago, when people used to track assets in notebooks, the digital age made things more complicated. On the one hand, computers enable easy lookups and tracking. On the other hand, digital technologies also allow unlimited forms of financial misconduct. For an average person, navigating digital traces of complex financial transactions is daunting. That is where financial forensic experts come into play. Using their financial expertise and courtroom experience, they can help you focus on what is vital during the disclosure process and the ensuing trial.
  1. Work with an experienced divorce attorney. Going through a high-net-worth divorce is challenging. In addition to adjusting to life as a single person after several years of marriage, spouses face the prospect of a different (often humbler) lifestyle. What you get in marital property division determines your spending and lifestyle choices in the future. The stakes are too high to allow yourself to go into the courtroom alone. A well-versed family attorney knowledgeable in financial matters will protect your rights and interests, no matter how contentious the issues are.

Key Takeaways

  • High-net-worth divorces involve dealing with valuable property such as real estate, family business, investments, cryptocurrencies, and antiques. Due to its exceptional value, both spouses have an interest in keeping the larger share of marital property.
  • The statistics show that more than 31% of adults in Florida have been dishonest about money toward their spouses. More than 6% engaged in some form of financial misconduct.
  • Financial forensic experts play a critical role in detecting financial misconduct and uncovering hidden assets during a high-net-worth divorce.
  • Common types of financial misconduct involve transferring funds to offshore accounts, concealing assets, undervaluing assets, misrepresenting income, and running sham businesses.
  • The most effective strategies to prevent and uncover hidden assets in high-net-worth divorces include collecting financial records, hiring financial forensic experts, and working with an experienced family attorney.
Your Go-To Financially Savvy Family Attorney

Your Go-To Financially Savvy Family Attorney

A top-tier family attorney in Fort Lauderdale, FL, Scott A. Levine has been practicing law for two decades.

His successful record includes the most contentious high-net-worth divorces in which one or both spouses engaged in asset hiding and financial misconduct.

Using his financial expertise and unmatched litigation skills, Mr. Levine will work shoulder to shoulder with financial forensic experts to gather relevant financial records and track hidden assets, helping his clients get their fair share of the valuable marital property in a Florida high-net-worth divorce.

Speak to the Scott A. Levine at Levine Family Law

No suspicious transaction or undervalued asset can go unnoticed with Mr. Levine at your side. Please call 954-587-2244 today to schedule your consultation.

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