If you’re concerned your spouse might be hiding assets, you need to dig deeper.
But, where do you start? How do you find hidden assets in a divorce? And what are the red flags to pay attention to?
I spoke with private investigator Joe Seanor to get answers to these questions.
Let’s jump in.
What are the most common ways that people hide assets from their spouse?
Joe Seanor: Some of the most common ways we have found with people hiding money from their spouse is they will have bank accounts set up in the names of their children. They will hide money with their mothers or fathers sometimes.
But the one that we’ve found that is the most interesting and eye opening for me is the fact that the spouse will hide the money in a bank account that they’ve opened up on their spouse.
Let’s say the husband is hiding money. What he will do is he will open up a bank account under the wife’s name and put his money in there, because at that point they’re married, they have the same address, everything’s easy for the husband to open up a new bank account. All the statements come to the house, the wife doesn’t pay any attention to it, and yet the husband is able to open up a brand new account and keep his money in there safely and hidden away from his wife. That is one of the newest ones we’ve seen, definitely over this past year we have seen more and more husbands doing that.
Should banks be opening an account in wife’s name without her authorization at husband’s request?
What usually happens is that the husband will go in with maybe a bank he already has an existing relationship with. The bank knows that the husband is an account holder there. The bank knows that he’s married, and so he’s already laid all the groundwork for the bank to open up the account without any problems.
What are some of the other ways that you’re seeing people hide money from their spouse?
We’re also seeing a lot of times where the spouse is hiding the money in cryptocurrencies. The reason for doing this is because cryptocurrencies are “anonymous,” but they’re truly not anonymous. I mean with dedicated effort and time, pretty much all of these accounts can be turned over. But one of the things that people do is they think, “Well, it’s digital money, so therefore we can hide it much, much easier.”
When it comes to cryptocurrencies, you’re now seeing more and more often that there are ATMs that allow you to get bitcoins and other cryptocurrencies. Simply by putting cash into the ATM, you’re able to put it into a bitcoin account. That makes it easier to hide money there.
What are some red flags that indicate that your spouse might be hiding assets?
One of the biggest things that a spouse needs to look at is the fact that if their other spouse is becoming more and more cryptic about the finances. By that I mean they’re saying to them, “No, no, no. You don’t need to worry about that. I got it covered.” It is where they’re now taking all the money that’s coming into the family and the spouse is the only one that is now controlling the money, the only one that has the bank account, the only one that’s dealing with the taxes.
And they don’t let the other spouse have any activities with it or any sort of input. When the spouse says, “Well, what’s going on with our money? How much do we have? Do we have retirement?” The spouse will say something like, “I’ve got it covered. We have a really great retirement. I’ve got a 401K. All of our money’s being handled by our money manager. We’ve got it all covered.” That’s where it first starts out.
When it starts to get more and more controlling, that’s absolutely where red flags should be waving back and forth. Where the spouse says, “Here is your credit card to use. This is how much money you can spend on it,” and when they start taking more and more control over the day-to-day finances, that is a big problem.
That’s when it’s time for somebody who is going through to talk to a professional about this. Because with such tight control over the money, the other spouse in the relationship does not have any clue as to how much is out there, where it’s going, what the money’s doing, or what they have planned. That is a huge, huge problem.
What steps should you take if think your spouse is hiding assets?
Step 1: Make sure that you’re safe. Don’t do anything that’s going to put you in jeopardy or cause your spouse to get angry or violent with you.
If they start getting angry and violent and threatening, that is a gigantic red flag. If that happens, seek help from a professional that understands the situation right away so they can assist you.
Step 2: Start gathering information and financial documentation. Take pictures of every single document you can find.
If papers come in about a bank account or insurance or money markets or stock investments or whatever, take a picture of it. That’s because your spouse shows up and these documents quickly get filed away or put away, at least you’ve got some pictures.
The number one thing we tell every one of our clients when they come in to talk to us about finding money is, “What documents do you have that we can look at? Do you have tax returns?” We’ll go through the tax returns and look to see where they’re saying they have accounts, and where they’re saying they have money.
Take pictures of any insurance documents, any bank account documents, any sort of financial document that comes in the house that you can. Then get it over to us because you’ve got to have some information to start from. It saves a lot of time and effort if the client is already starting to collect this information ahead of time. Then they don’t have to go rushing around trying to find it, but that is definitely the number one thing.
If you’re not actively involved in the finances of the family, then you need to start taking pictures of any and all financial documents coming into the house, and you absolutely should be making sure that you have a copy of any and all tax returns. Because if you’re not signing them, if you’re not signing the tax return yourself, it’s all electronic and you haven’t looked at it, that’s a big giant warning sign right there.
I’ve had many clients come to us and when we ask them about tax returns they have no clue, and they haven’t seen a tax return in 10 years or longer. This is a huge problem.
Get all that basic information, financial documents, letters coming in, and tax returns, so you at least have a good handle on what’s out there.
So step one is talking to a professional and making sure that you’re safe. Step two is really trying to gather as much information and financial documentation as you can so that they can provide someone like you with the bread crumbs needed to start looking.
Are there any other steps that they should be taking?
That is the real starting point. Because once somebody comes to see us, then we start looking at all the places that money could be hidden. We have an extensive interview process we do with our clients so we can get more and more information to be able to decide where are we going.
We are very targeted when we do our research. We want to be very, very specific about what we’re looking for and how we’re looking for it, because this way it’s effective and extremely efficient.
So if you can, get financial documents ahead of time, take pictures of them with your smartphone, and this way you’ve got copies of it. This will help make it so much easier for you to do this, but the best part is if it hasn’t progressed this far yet, take the time now to sit down with your spouse, ask them about finances. Tell them you want to talk to a really good Certified Financial Planner so that you can go over everything, and this way that will let you know what the situation is like.
If the spouse says, “Yes, I’ve got somebody really good, I’m very happy with them, but yeah, we can go talk to somebody,” that’s great. But if they start pushing them off right away, “No, you don’t need to do this. I’ve got it under control,” then you’ve got an extremely controlling individual and you’re definitely going to be facing problems down the road.
You mentioned tax returns. Are tax return transcripts sufficient?
The problem is when you’re going with tax returns is that the person who is controlling the finances, when they file all the paperwork, they’re the primary name on the account. Then the spouse is the secondary name on the account.
So, if it’s all filed electronically, the spouse can ask for a copy. They’re going to have to go to the IRS office and ask for a copy but the major problem with all of that is that when they go to ask for these, that the spouse gets notified that, “Hey, your wife is in here asking for copies of the tax returns. You’re the primary.”
So we always tell people, “If you can do this from what’s around the house, that’s the best way.”
But the other way we say is you go straight down to the IRS office and you ask for your own copies.
Every decision that people make as they’re going through the divorce process or preparing for divorce is a cost/benefit decision.
What are some of the ways that you’re advising clients to consider the cost/benefit of searching for hidden assets? How do you determine if a lingering concern is worth pursuing?
We’ve had a number of situations just like that, and what we do is we have the client come in, sit down with us. We do an interview about who their spouse is, what their spouse does for a living, what do they know about the finances currently.
Then we ask them, “Can you get us copies of any and all financial documents? Get us copies of any IRS papers that has been filed, all your tax returns, whatever you can get safely.” Because safety has to be the number one concern here.
We have seen too often where people come into our office and they’ll be in the situation of, “I need to track money from my spouse,” and as we talk to them we find out that their spouse gets very physically violent with them when they bring up the question of finances. So safety always has to be the first concern,
But we will always do is we will ask, “Do you have copies of your tax returns? Do you have copies of any other financial documents that we can look through with you to get a better idea about this to see if there really is money that’s here?”
We’ve had people come in and say, “Oh, I know my husband has got $15 million hidden away.” And we’ll reply, “Okay. How do you know that?” And as we go through our interview, it’s all based on assumptions of what they have said their husband does.
If we do a background check on the person, we find out what their background is, we’ve found out that this guy does not make much money. He barely makes $75,000 a year. There’s no way he has $15 million. He didn’t get it from his parents. He has no real estate. He just has said to her over and over that he’s got millions of dollars banked away. And from his employment checks, he’s never made enough to have millions and millions saved away.
Going through tax returns and other financial documents, that gives us a bigger picture to see whether or not there really are things. We get asked all the time about doing a financial check for somebody.
We will tell clients, “We go through whatever financial documents you’ve got now. Then, we need to go through whatever IRS filings you have for however many years you’ve got it for.” Once we do that then we’re able to say with reasonable confidence, “Here’s all the bank accounts that we have. Here’s how much he’s claimed in each one. Here’s what the house is worth. All this seems right.” And they’ll say, “Yeah, that’s all true.” That’s when we look at it and we see theoretically unless this guy invented something very recent, the money’s not going to be there.
We’ll do the search for clients, but it’s a waste of money to do this many times. We can do the financial investigation but a lot of times if the money is just not there. We don’t recommend doing a financial investigation, because the money is better spent towards the divorce or whatever else the person needs, not wasting it trying to track down money that may or may not be there.
At what point in the divorce process should someone hire you to assist with the discovery process?
Related: Essential Guide to Divorce Discovery
We can get pulled into a situation like this at any point in time in the divorce case. Hopefully we’re there in the beginning, because we can do a better job of making sure things go in the right direction with all of this. Other time’s we’re pulled in after they’ve been separated or after they’ve filed the divorce papers. Then we have to go back trying to recreate a lot of stuff.
The best thing is when a client first comes in to talk to an attorney and at this point they’re only thinking about divorce.
At the point in time they need to talk with the attorney that would be our preferred time for them to come in and talk with us as well. Because at least at that point we can say, “Here is our plan of action,” because we’ve written up a document that we have for people that are going through a divorce.
We go through a long list of things. I think there are 33 different items on the list. This way, if you’re able to collect all this information ahead of time, it makes it so much easier when the divorce actually goes through, because you’ve got to have that much material together for the divorce.
So, setting the table in advance is important?
Yes, if you can get all this information ahead of time, you’re not scrambling. You’re not out of the house. There’s not some sort of temporary restraining order on you that prevents you from going back into the house.
These are things you may end up having to deal with, and that’s where if you’re planning on getting a divorce and you’re talking to an attorney, the very next meeting you should be going to is meeting with us and talking to us about it so we can say, “Okay, here’s our typical plan of action for this. Here are the steps you need to start looking at.”
We’ve got a couple clients right now that are still living with their spouse. They’re still together. The divorce isn’t planned and they’re not planning on separating for a couple more months, but they’ve already met with us.
They’ve got our checklist of items. They’re collecting everything they need so that when they serve their husband with divorce papers and separate from their husband, if the husband grabs all of his stuff and disappears, they’ve already got all the information they need about all the family finances, about the titles to things and all these different things.
It’s so, so much easier and better for them to do it that way.
What are some of the information that people should be gathering?
Here’s a short list of the information to pull together:
- titles to cars
- real estate papers
- keys to any safe deposit boxes
- safe information
- driver’s license
- medical records
- account statements
You’ve got to have copies of these things, because when it comes to a divorce, we all want to think that when two people decide to get married and then they end up getting divorced that they’re going to act cordial to each other and act like adults with each other.
Unfortunately, about 95 percent of the time it never works like that. It becomes a very stressful situation, and at times can become a dangerous situation. That’s why being prepared ahead of time is what will make this successful and safer for everyone.
What’s the difference between a private investigator and a forensic accountant as it relates to looking for hidden assets?
When it comes to private investigators versus forensic accountants, we are not accountants whatsoever. We are not the people who will sit down and go through and find every single account and tally up everything and go through all the details. We are looking simply for financial documents, bank names, financial names, property records and totals. That’s all we’re looking for.
A forensic accountant will go through all the money, create spreadsheets to show incomes and outgoing costs and tax numbers with a high degree of detail. By the end of it, the forensic accountant can tell you exactly how much money the spouse is worth.
We’re ones that will find money. We’re not going to tell you how all that money got there. We’re not going to tell you how much his paychecks were that went into there and how much money he deposited. We’ll tell you he’s got a bank account with the Bank of China and it has $2.3 million in it. That’s what we would be able to tell you, something like that.
A forensic accountant can give you a long term standing of all the money coming in and out of the family.
Can you give an example of when using a forensic accountant might be more appropriate?
Sure. Let’s say two people are divorcing and they have children. They’re separated and they’re going through the divorce and the wife has three kids, and she has had no job in the past 10 years because she’s been taking care of the kids. When she goes into this process, she’s going to need alimony and child support.
Sometimes, the husband, depending on the type of individual he is, will be thinking, “I’m going to make sure that my money shows I don’t make anything because I don’t want to pay her anything.”
The husband may tell his employer to have them change their salary levels. Or they’ll have them “fire” them, and then they’re hired back on a few months later as a contractor. There are all sorts of tricks that these spouses will do.
If a wife claims, “My husband made $1.5 million working for whatever this company is every year.” The spouse comes in and goes, “Yes, I used to make $1.5 million, but they fired me three months ago, so now I’m unemployed. I don’t have $1.5 million a year to base my alimony and child support on. I’m on unemployment, so I can only pay the bare minimum in child support.”
In fact, they’ve been hired back on as a contractor, and so they’re making close to the same amount of money, but they’re working as a contractor.
There are tricks like this that spouses will do, and so a forensic accountant is great in a situation like that, because he can show how this person has had this steady flow of income to this amount of $1.5 million over a few years or many years, and shows how his pay has risen progressively year after year.
He can also determine, “Well with this, he’s got a 401K, and his 401K should have this in it. And this amount is x.”
That’s where a forensic accountant comes in very handy, when the spouse is trying to conceal how much he makes or he’s lying to the court about his paycheck. That’s where a forensic accountant is great at showing, “Here’s the past history of everything he’s made. This is what he’s been making up until this point.”
So, the forensic accountant is best at tracking the flow of funds down to the penny, tracing separate property claims and calculating historical income.
On the other hand, a private investigator is better equipped to identify if there are hidden assets worth pursuing further.
Then, the forensic accountant would come in on the back end and use the information provided by the private investigator to track what actually happened. Is that a good recap?
Absolutely. That is a fantastic recap of it.
What is your process for finding hidden assets in a divorce?
We start by asking a lot of questions in the initial interview. Everything is on a case-by-case basis. Generally, we start with, “Tell us everything you can about your situation. Tell us everything you can about your husband.”
Then we start asking questions such as, “How long have you guys been married? What’s your goal?”
Our big thing is always, “What is the goal that meeting with us is about? What are you looking for? Do you think there is hidden money? Are you looking for protection? Are you looking for something else?”
A lot of our clients are looking for hidden assets. I’d probably say realistically 30 percent are looking at hidden assets that don’t exist, where they’ve been duped by their spouse that they have all this money and they really don’t. A lot of it comes down to the whole interview process we do with them, because we’ve got to find out, “What is the situation you’re in? Why do you feel these things about your husband that makes you think he has all this money?”
Maybe he really does have all this money. We recommend looking at all the financial documents they’ve got. One of the investigators that works with us, he used to work in the banking industry for 10 years before coming to join us. He’s our in-house expert who reviews this information and then gives us his feedback. He often times will come back with a specific game plan of what to do and what to look at next.
There are also times where he’s looked at all the data that the client’s brought and said, “I don’t think there’s anything there.” That is just something that we have to look at, that we have to find out whether or not it’s really realistic for them to do anything. That’s because most of the time we’re dealing with people who have never ever had a clue about finances, have no idea what the spouse has made, and is just going on specifically what the spouse has told them.
That’s really where we’re coming into play, to be able to help them understand what the truth is. Because they’re usually going, “Oh, well I’m divorcing him. I know he makes like $2 million a year with his tech company, and I need to make sure I know where all the money’s at.”
That’s really nebulous. Instead we’ll offer up something more along the lines of, “Okay, let’s go back through your whole case and let’s figure out what is needed by us, if you really need us at all.”
If someone suspects their spouse is hiding assets, what should they be looking for in a private investigator?
I would be looking for experience, abilities, and I would have to say absolutely a face-to-face interview because you’ve got to meet with a private investigator and make sure that you are comfortable with this individual. Because if you’re not comfortable with the private investigator you’re looking to hire, then don’t do it. You’ve got to make sure that you’re dealing with a professional, licensed, and insured private investigator before you go and do anything with them.
We work with a lot of law firms and we deal with a lot of their clients, and every single one we always meet with the client face-to-face, because we want to do our own assessment of the client as well. We’ve had some clients that have attempted to hire us and we have absolutely refused the case because something does not feel right.
You must be 100 percent comfortable with your investigator when you hire them, because if you can’t trust them, if you don’t get a good gut reaction to them when you meet with them, then you need to walk away.
There are a lot of private investigators out there, and these are people that you can go and meet with a number of them until you find the one that you like. We would think that we’re one of the better ones out there, but this has to be something that the person themselves is happy with.