Uncovering hidden assets is the bane of attorneys handling high income divorce cases. Any lawyer can use interrogatories and a request for production of documents, spot issues from facts and construct an argument that advances the client’s interests. What separates common lawyers from high asset divorce attorneys is the ability to use legal tools in discovery to fully uncover the facts. A competent high income divorce attorney knows how to use depositions to discover undisclosed retirement and pension funds, search land records to discover fraudulent real property transfers, and employ forensic experts to expose personal funds comingled with business accounts.
Retirement Accounts And Pension Funds
Depositions can be used to discover hidden pensions and retirement accounts in a high income divorce. If the suspect spouse is an employee, one need only depose a representative of the employer’s accounting department to determine retirement and pension benefits. If the spouse is a business owner, then the same mechanism can be used with the business’ accountant.
A problem may occur if the suspect spouse is a small business owner with few employees. In this situation, it is possible that the spouse has hands-on control of such records. The way around this potential problem is to first depose all the employees to determine the number and location of all computers used for the business, and then file a motion with the court requesting permission to have forensic computer experts retrieve the hard drives of the computers. The experts will be able to locate any retirement or pension information, or expose any recent large-scale file deletions from the computers.
Fraudulent Real Property Transfers
One common trick spouses use to hide real property investments involves transferring the property to a trusted friend or family member, with the intent to have the property returned after conclusion of the high asset divorce. The remedy to this hurdle is simple – search the land records.
Most states have their land records online, which makes this task relatively simple. One only need to type in the name of the suspect spouse, or the names of his or her businesses, and the search results will show any recent transfers. Courts are familiar with deceptive practices in divorce cases, and it should not be difficult for a competent high income divorce attorney to cause the court to question such transfers.
Comingled Personal and Business Funds
This third category of hidden assets is perhaps the most difficult to uncover. This is often seen with small business owners who retain complete control over their corporate bank accounts. The business owners will use corporate funds for personal expenditures, or earmark an unreasonably high amount of funds for questionable corporate purposes, and then report the personal expenditures or earmarked funds improperly to their accountants, or flat out cheat on their tax returns.
The way around this mess involves two steps. First, the discovering spouse must subpoena all of the suspect spouse’s personal and business bank records and tax returns. Second, the spouse must hire forensic accountants with experience in business valuation to comb through the bank records and tax returns, and expose numbers that do not add up. The experts will prepare their own sample tax returns for the suspect spouse for the past five years based on the bank records and other available information. If the sample tax returns differ significantly from the actual tax returns, then the high asset divorce lawyer should have no problem persuading the court to account for the discrepancies.
The main hurdle in litigating a high asset divorce is uncovering hidden investments. The law does provide legal tools to uncover the truth. Only attorneys with real experience in high income divorce matters have the skill to fully implement these legal tools, and protect the client’s rights.