Robert G. Smith, PLLC

Preventing fraud in a divorce

New York couples who are facing the end of their marriages may also have to deal with the possibility that one spouse may be concealing assets from the other. In a high asset divorce, there may be more places to hide these assets because the complexities of the couple's financial life offer a number of opportunities for financial fraud.

An individual who suspects a spouse of hiding assets may need to hire a forensic accountant in order to untangle the financial picture. For example, business owners may set up shell corporations or falsify income. Employees might hide stock options, deferred compensation, bonuses or other forms of income. Other vehicles for concealing assets include unfunded trusts, hidden brokerage accounts and safe deposit boxes.

Financial fraud is not just a matter of hiding assets. Dissipation means the other spouse spends or ruins assets. This might include allowing foreclosure on a house, destroying marital assets or a spouse's personal property, or spending money on extramarital affairs.

Individuals might suspect that fraud is occurring prior to having proof of it. Some behavioral changes might signal fraud. For example, a spouse who becomes secretive about financial transaction or takes large withdrawals from accounts without explanation might be attempting to move and conceal assets.

People who are contemplating a divorce may wish to consult an attorney to discuss how best to protect themselves and their financial interests. One spouse may be attempting to keep the other from leaving the marriage with what is rightfully theirs. Even if the couple prepared a premarital agreement, it could be challenged and thrown out in court, or one spouse could agree to follow it but hide assets in an offshore account or elsewhere. Financial as well as legal advice may be necessary in order to ensure that division of marital assets goes smoothly.

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