Are You Worried That Your Spouse is Hiding Assets?

V. Stiviano, the former mistress of former Los Angeles Clippers owner, Donald Sterling, is being sued by his wife of over 50 years, Rochelle Sterling.  In her suit, Mrs. Sterling is seeking the return of gifts that Mr. Sterling purportedly gave to Ms. Stiviano.  Among the gifts Stiviano apparently received are a $1.8 million home, a Ferrari, two Bentleys and a Range Rover.  Mrs. Sterling claims that these gifts were purchased with the parties’ joint monies without her consent.

While the Sterlings seemingly do not appear to be headed to divorce court, what if they were?  This bit of news about a wife suing her husband’s mistress for substantial gifts made during the marriage using marital money raises the issue of the need to sometimes examine a spouse’s activity in the period leading up to the divorce to determine if one spouse was dissipating marital assets through extravagant gifts, engaging in fraudulent transfers or hiding money to defeat the other spouse’s claim to those assets. The monogrammed hand towels “his” and “hers” have an ominous meaning. It is not uncommon for a spouse to begin divorce planning well in advance of the complaint for divorce being filed. It can start many years before divorce proceedings. Most couples go into marriage thinking that what’s yours is mine and what’s mine is yours. However, when it comes time to divorce a spouse may become like a child screaming “MINE!!!” Enter the “his” and “her” categories.

It is important to note that property does not have to be in the name of both spouses to be considered marital property.  Hiding assets  in a rapacious attempt to defraud a spouse can happen.  Here are some telltale signs that something is amiss and that the hiding of assets and/or income might be a concern:

• If your spouse maintains total control of finances, is secretive and/or does not allow you to view bank statements, credit card statements, and documents regarding assets. Sometimes these documents are not even being mailed to the parties’ home. Allowing your spouse total control of the finances without the sharing of information limits your knowledge of marital assets and makes it easier for assets to be diverted and hidden.

• Your spouse has locations out of the home to which you are not allowed access, such as a safety deposit box, a P.O. Box, or even an office.  This is a concern if your spouse has mail sent here rather than to the home where both parties can see it, and/or keeps paperwork in such a location outside the marital home where you do not have access.

• Your spouse could have locations in your home to which you do not have access. Are you not allowed access to home office, computer or elsewhere?   Your spouse’s secrecy is a concern and enhances the ability to hide, dissipate or divert assets.

• Your spouse if self-employed may be under-reporting income on the tax return or somehow “cooking the books”.  A spouse may come into a divorce court swearing that the other spouse earns more than the income reported to the IRS, but proving that can be an uphill battle and may require a forensic accountant to evaluate those books and the marital lifestyle.  Another concern is that if the court discovers that one or both parties filed a fraudulent tax return or a return that under-reports income, the court is supposed to report the parties to the IRS.  If both parties signed a joint tax return, the IRS may pursue both parties unless one obtains.

• One way to avoid distribution of a marital asset is the creation of a trust account in the name of a third party, such as a child and transfer ownership of a marital asset into the trust.

• One spouse may transfer ownership of marital assets to a friend or family member for little cost or for less than the asset is worth in order to defeat the other spouse’s claim to ownership.

• A spouse may maintain a foreign bank account.

• Sometimes a spouse’s spending will increase in in the pre-divorce period, in an effort to reduce liquid assets (or possibly to enhance the marital lifestyle for support purposes).  On the other hand, a high income earning spouse will suddenly begin suffering a “personal recession” so to speak, and assert that there are diminished liquid assets and bank accounts.

If any of the above is occurring, not all hope is lost.  The discovery process is a useful tool to obtain information during a divorce litigation.   Discovery allows a spouse to issue a notice to produce which allows you to ask for documents, issue interrogatories which allows you to pose questions, and you can request to inspect safety deposit boxes and other areas. In addition, during the divorce you have the ability to hire a forensic accountant to analyze a business and conduct a life style analysis.

If you suspect your spouse is hiding assets the Law Office of James P. Yudes has the skills necessary to help you protect your interests and zealously advocate on your behalf.