I am often asked to help divorcing individuals track down potential assets or debts of their spouses during a divorce. It can be an arduous job, sifting through piles of paper — pouring over bank statements, credit cards bills, and tax records. In the past, I have had to rely primarily on traditional tools-of-the-trade and my own experience in order to sniff out hidden monies or debts, property or businesses strewn along a paper trail.
Today, thanks to advances in technology and online resources, this part of my job isn’t nearly as scary as it once was. In fact, these days, the average individual can often discover quite a bit of information by simply using their own laptop. No treasure map required.
Often, digging up marital mischief and lies regarding finances just takes basic electronic detective work. Free public databases, such as those tracking real estate deals, often provide information on spouses who are less than honest. For example, one of my client’s husband had disclosed 11 rental properties as community assets. However, with online resources, we were able to located two additional properties not on his list.
Tax returns also provide a wealth of information for the trained eye. I have found offshore accounts, partnership interests, and bank and brokerage accounts previously unknown by the other spouse. In one of my client cases, I found that the husband had essentially “stashed” $80,000 with the IRS in overpayments that he could have pulled out after the divorce was final.
Another area that I thoroughly review and investigate are paystubs and other employee records that may reveal undisclosed company benefits. “Restoration” plans may be overlooked by the spouse and attorneys who typically focus on 401(k) and pension benefits. If an executive earns above $275,000 annually, the IRS rules state he or she must stop contributing to a qualified plan or 401(k). However, that executive may have an option to contribute to a “restoration” or supplemental plan which may go unnoticed. Legally, these funds are still considered community property that legally must be included in the list of marital assets to be divided.
Spouses are also doing basic detective work themselves these days by browsing online social network sites, and the history of the family computer, where they are finding things like visits to bank websites where the couple doesn’t have an account. Many online searches on Google, LinkedIn, Facebook, Twitter, Instagram and other apps can be used to uncover lots of bad behavior that could result in a disproportionate division of assets in divorce cases.
I advise clients to be careful in their efforts to “dig up dirt” on a spouse. It may be illegal to hack into a smartphone, secretly install GPS on a spouse’s car, or install keystroke monitors on someone’s computer. Depending on the state and the details surrounding how the data is acquired, there are still gray areas about what practices are acceptable.
Remember, the best defense in these matters is a good offense. As a married spouse, you have a legal right to know all the details of your community property and finances. You should always strive to understand what is going on in this area. A spouse may try to convince you that items in his or her name make it their separate property, but this isn’t necessarily the case. A good first step is to get your hands on as much marital financial information as you can before filing for divorce. Make your own copies of tax returns, mortgage statements, etc. and store them in a safe place. Pull up 3-5 years of bank, financial and credit card statements as well and save them electronically or make copies and store them safely. Set aside some time and review these documents carefully, looking for unusual activity.
I also advise clients to get a complete credit report on themselves and their spouses and also review these carefully. I often go over these reports and other financial records with my clients and help them look for suspicious items that could indicate hidden assets or debts. Knowledge truly is power, especially in a divorce.