Amanda (not her real name) was suspicious, with good reason. Her husband had asked her to take out a home equity loan in her name and give him the proceeds to support his failing manufacturing business. She refused, and started asking questions. It turned out her husband "had been siphoning cash out of the business, shredding documents, and setting up offshore accounts in the Bahamas," says Laura Walsh, the Weston (Fla.) certified divorce planner Amanda hired.
Under-reporting, hiding, and even theft of assets is anything but uncommon in divorce cases. Marital property includes jointly and most separately owned assets acquired during a marriage. People often try to under-report or hide these assets to reduce settlements with a soon-to-be-ex. Most often, the husband does the hiding, and the wife is hurt the most financially. According to Christopher Hayes, director of Long Island University's National Center for Women & Retirement Research, "the average woman sees a 45% drop in her standard of living after a divorce, while the average man improves his standard of living by 15%." Why? "The man usually walks out with the most valuable asset, earning ability, while the woman walks out with the biggest cash drain, the kids and house," says Ginita Wall, a forensic accountant and founder of the Women's Institute of Financial Education (www.wife.org).
If you're going through a divorce, your attorney may hire investigators to get a clear picture of your spouse's assets. But you can save money by doing some spadework on your own, using the Internet. For starters, check the "history" area on your family computer's Web browser. You may find, as one woman did, records of a spouse's bank or brokerage accounts that he had kept secret. That's only one step in assembling as complete a list as possible of each spouse's assets.
At www.divorcenet.com, you'll find a checklist with tips on entries in tax forms that may point to hidden assets. Was your spouse promoted, but there's no sign of a raise on the W-2 form? Maybe his boss is colluding with your hubby to defer payments until after the divorce. Are there big withdrawals on bank statements, which may signal phony debt repayments to a friend or family member? Or perhaps your spouse set up a bogus custodial account in a child's name.
WARNING SIGNS. You may suspect your spouse is using a closely held business to hide assets. While a forensic accountant or certified divorce planner can help you investigate whether a spouse is manipulating accounts to minimize income, software at www.split-up.com can help determine if you need a pro. Among other things, it suggests where to find signs of hidden money in a company's income statement and balance sheet. Of course, you need access to the books. But often, spouses are business partners. Look for payments to nonexistent employees, and deferred income and accounts receivable. Is your spouse a top officer of a public company, a board member, or owner of 5% or more of its stock? Visit EDGAR (www.sec.gov) and Yahoo! (biz.yahoo.com/reports/edgar.html) for filings on compensation, bonuses, stock and option holdings, and recent stock sales. You can also check on credit reports for card balances and real estate debt. To track your spouse's real estate holdings, try www.knowx.com. You may not find all the property if some is held in corporate or other names.
Some Web databases of public records are open only to licensed private investigators. Searches cost from $200 to $300--and are worth it. Financial decisions you make during a divorce will live with you for the rest of your life.
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