Think your spouse is hiding money in divorce?
It’s common for people to suspect that a spouse is hiding money in divorce. Usually, the suspicion results from the fact that one party pays most of the bills and has primary access and control over the bank accounts. Sometimes, it’s simply a result of a relationship that has been characterized by greed, selfishness, and a heightened focus on material possessions. Unfortunately, divorce shatters the trust that may have existed during marriage and makes most people nervous. However, it’s important to remember that the cost of investigating assets and challenging valuations may ultimately outweigh the benefits.
What to do if you think your spouse is hiding money.
In Texas, divorcing couples are frequently required by Court Order to complete a sworn Inventory and Appraisement (“I&A”) and submit it to the other side shortly after the beginning of the suit. In the I&A, each party lists the individual and joint property of both parties. Each side also uses the I&A to characterize the assets as separate or community property. The two inventories are a solid starting point because they identify areas of disagreement. Although not usually filed with the Court, an I&A can be introduced into evidence. If admitted, the I&A becomes a judicial admission for characterization, and it’s accepted as true and binding on the party who signed it. See Roosevelt v. Roosevelt, 699 S.W.2d 372, 374 (Ted.App.—El Paso 1985, writ dism’d). Although the I&A is a long and complicated form that seems routine and unimportant, it is critical and must be completed accurately.
Attorneys can use discovery to aid in the preparation of the I&A, and discovery can be used after the I&A is completed (to uncover inadvertent or intentional omissions or undervaluations). In Texas, the discovery procedures that can be used are described in the Texas Rules of Civil Procedure and include depositions, Requests for Admission, Interrogatories, and Requests for Production. Keep in mind, however, that discovery will always increase the cost of your divorce.
Should you hire an expert?
Yet another option for dealing with suspicions of hidden assets or undervaluation is hiring an investigator or expert witness to help determine assets’ existence, characterization, or valuation. Experts can assist with tracing (following the movement of money from one account to another), asset valuation, and property characterization. However, like formal discovery, retaining experts such as forensic accountants is very expensive and is normally reserved for high-stakes cases.
In the end, divorcing parties should carefully discuss their concerns with their attorney and carefully weigh the costs of initiating a formal inquiry into potential hidden assets against the likely benefits. Most often, the best advice is to separate your emotions from the “business” of property division and make your choices for this aspect of your divorce based on economic principles.