Five Ways Discovery Can Help You Find Hidden Assets in a Divorce
Many people are concerned that their spouse may be hiding assets to avoid dividing them in their divorce. Naturally, they are also worried about how they can even find the hidden assets. Finding hidden assets in a divorce can be very involved. Here, we discuss one aspect that is available to anyone going through a divorce—the “discovery” process.
To help people find the information they need, courts have created rules that allow litigants different ways to obtain information. These include various tools in the rules that are collectively known as “discovery.” These tools are the most common methods attorneys use to find assets before having to turn to more expensive options such as private investigators or forensic accountants.
Sometimes, discovery produces the very assets that are being searched for. Sometimes, discovery produces the leads that help you find the asset.
1. You can require your spouse disclose their tax returns, pay stubs, bank accounts, and other financial documents within forty (40) days.
The most basic tool in the discovery arsenal is the Uniform Interrogatories. They are often served on your spouse along with the Request for Production. The Uniform Interrogatories are standardized questions that your spouse must answer under oath. This includes questions regarding their finances. This usually leads to a wealth of information.
The Request for Production is even more useful—it requires your spouse to disclose tax returns for the last three years, all documentation related to pay for the last three years, a copy of their Social Security Statement showing their earnings record over their working career, all banking records for the last three years, all online account statements (including PayPal, Venmo, Zelle, Apple Pay, etc.), and all bank accounts for the last three years. Being required to disclose this information makes it difficult for someone to hide assets without a trace.
We understand that you might be concerned your spouse might lie. That can happen. But if they do lie, they are doing so under oath, and if they get caught, that creates quite a problem for them. Bear in mind—their lying about the existence of an asset does not mean we quit looking for it.
2. You can subpoena your spouse’s employer to provide pay records for your spouse.
When a spouse is employed, it becomes even more difficult to hide money and assets. Many spouses are reluctant to hand over the payment history, even when required to do so. If they do that, we can simply subpoena their employer for the payment records, including their pay stubs and W-2’s. A subpoena is an order from the Court directing someone to hand over certain documents or to give testimony about certain things. Because it is a Court order, an employer must comply by providing you with the records (though they do have the chance to file an objection with the Court).
This makes it easy to see if money is being hidden. For instance, we once saw a case where a litigant had intentionally altered her W-2’s and pay stubs. A subpoena to her employer showed what she had actually been making. Needless to say, she got into a lot of trouble.
Be aware that many employers’ attorneys make people seeking this information jump through some hoops, including signing a protective order (limiting how the information may be used) or to narrow the scope of your discovery request. This can be annoying, but, in our experience, you are usually best served to go along with what they are requesting, as they rarely ask for anything outrageous and are simply trying to protect their client, and they will disclose the information you need once they believe their client is protected. If, however, you believe their demands are unreasonable or impair the information you are seeking, you should consult with an attorney regarding your options.
3. You can subpoena your spouse’s financial and bank records.
Many lawyers like to start with bank accounts when looking for hidden assets. They look for abnormal withdrawals or transfers. Sometimes, the transfers include the trail to the hidden bank accounts, as it may indicate into what financial institution and/or account the money was transferred. You should scour each account carefully. Search for transactions into and out of unknown accounts.
Once you have the history of payment from an employer, you can compare it against your spouse’s bank account. For example, a few years ago, one of our clients was accused of hiding income. Opposing counsel subpoenaed her employer. We, in turn, obtained our client’s bank records, including deposit slips. Using the information from her employer and from her bank, we were able to go through and show how each paycheck lined up with a deposit slip showing she had deposited her paycheck into a joint account with her husband. She had not been hiding money! We outlined this in a letter to opposing counsel and included a demand they withdraw their claim, which they did.
When dealing with someone who is self-employed, looking at their bank records is vital because payments from clients may transfer through the bank that they don’t report. This is also true of online payment services, such as Venmo or Apple Pay. Seeing payments going through the accounts can help you identify how much they may truly be earning.
You should also request any loan applications your spouse submitted because a tremendous amount of financial detail is required with a loan application, and if your spouse is prone to hiding assets, chances are your spouse was more open with the bank than your spouse will be with you.
4. You can subpoena any bank where you suspect your spouse has an account.
Because banking accounts are so valuable in the endeavor to find hidden assets, you want to make sure you’ve got the records from all your spouse’s accounts. Beyond the bank accounts you’re aware of are the bank accounts you don’t know exist. If you suspect your spouse has a secret bank account, you can subpoena the banks to see if you can find it. It’s best usually to start with the major banks: Wells Fargo, Chase, Bank of America. If that is unfruitful, you can go to the mid-sized banks: BMO Harris, PNC Bank, MidFirst Bank, U.S. Bank, Desert Financial, etc. (Additionally, sometimes, their secret accounts might show up on a credit report, including your own).
5. You can depose your spouse regarding where assets might be.
You also have the chance to depose your spouse and question them about where the assets might be. It’s best to save this card until you’ve gathered all the paper documentation you can and have had a chance to thoroughly review it. At a deposition, you can ask your spouse about certain assets, certain transactions, etc., and they must answer under oath. Depositions typically last several hours, and while some people may stonewall and lie even when under oath, it is difficult to do so for hours on end. For this reason, a deposition has long been a tool used by attorneys to discover where a person has assets.
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