In community property states, assets acquired during the course of marriage are considered marital assets. In a California divorce, all marital assets are generally subject to equal division between spouses.
Full financial transparency from each party is required by law. Attempting to reduce the apparent value of the marital estate is financial fraud. Despite the legal consequences, some individuals go to great lengths to conceal certain assets to avoid fair division, especially in high-asset divorces.
If you are going through a divorce involving complex assets, such as family-owned businesses, retirement assets, investments, deferred stock options, intellectual property, homes, vacation properties, or passive income, it is essential to consult with an attorney experienced in handling high-net-worth divorces. At Kaspar & Lugay LLP, our attorneys work diligently with forensic accounting experts to protect your interests and uncover all marital assets, including hidden, misrepresented, or “forgotten” assets.
Common Ways Spouses Hide Wealth In High-Asset Divorces
Some commonly overlooked assets include stock options, Restricted Stock Units (RSUs), deferred compensation plans, cryptocurrency, foreign assets, and high-value personal property such as artwork, jewelry, and luxury vehicles. An individual may commit financial fraud using various tactics in contemplation of divorce or during the divorce process.
- Underreporting Income: A spouse may hide their bonuses, commission checks, or other forms of compensation to create the illusion of fewer marital funds available for division.
- Fabricating Or Inflating Debt: A spouse may claim to have made loans to friends or family members that never occurred to reduce the apparent net worth of the marital estate.
- Transferring Assets: A spouse may conceal funds from division during divorce by temporarily transferring funds to friends, family members, or business associates with the intention of reclaiming the funds after the divorce is finalized.
- Offshore Accounts Or Shell Companies: Assets may be obscured through foreign bank accounts, offshore investments, or complex financial instruments that complicate the discovery of marital funds and require expert investigation.
- Manipulating Business Records: Underreporting profits or overstating expenses is a common tactic of those who own or control businesses. A spouse may keep a set of books with false financial information while hiding real business records. They may attempt to manipulate cash flows by intentionally delaying lucrative contracts until after the divorce.
- Hiding Cryptocurrency: In one reported case, a housewife, with the help of a forensic accountant, discovered a digital wallet with half a million dollars worth of undisclosed bitcoin during her divorce.
The Role Of Forensic Accountants In High-Net-Worth Divorces
Our California law firm frequently represents clients in high-net-worth marriages with complex financial portfolios. We partner with forensic accounting experts who audit, investigate, and analyze financial information, employing strategies to give our clients a more accurate understanding of their marital estate.
- Document Examination: Scrutinize bank statements, tax returns, and other financial records to uncover any hidden or “forgotten” assets.
- Valuation Of Complex Assets: Evaluate the value of complex assets, such as business interests or stock options, to ensure accurate assessment.
- Tracing Asset Acquisition: Track how and when assets were acquired to establish whether they are community property, separate property, or commingled.
- Financial Statement Analysis: Analyze income statements, cash flow statements, and balance sheets of a business to determine its fair value.
A forensic accountant can be indispensable in a high-net-worth divorce, providing critical insights into deep financial matters. For example, their analysis may establish that a client deserves to be compensated for their contributions to separate property owned by the other spouse. In other cases, they may even discover that a client’s separate property has been siphoned or misappropriated by their spouse.
Legal Actions To Find Hidden Assets In A California Divorce
Signs of a spouse hiding assets include large transfers, unrecognized account information, or account values that differ significantly from what you had anticipated.
It is important to gather as much information as you can about your finances and seek representation as soon as possible from a lawyer who will negotiate effectively on your behalf. Kaspar & Lugay LLP attorneys use a number of strategies to uncover all assets in a divorce, especially where one spouse may earn more or have more financial knowledge than the other.
Detailed Financial Disclosure
We request comprehensive financial disclosures from both parties. We thoroughly review tax returns, bank statements, investment portfolios, and any other relevant financial documents to identify any possible inconsistencies or missing items.
Discovery & Obtaining Subpoenas
During the discovery process, we may issue subpoenas to obtain financial records from banks, investment firms, and other financial institutions. This can help expose hidden assets or funds concealed in holding companies or offshore accounts. A forensic accountant may spot omissions or uncover patterns of asset misrepresentation.
Depositions
In a deposition, our attorneys will question the other party under oath about their finances, which can reveal hidden funds. Any false statements can have legal consequences.
Lifestyle & Spending Analysis
A forensic accountant can examine all levels of expenses, from mortgage payments and credit card statements to invoices and receipts for small items, to determine whether expenses are legitimate or suggest concealed fraud. They may spotlight discrepancies, such as a spouse maintaining a lifestyle of extravagant purchases on a seemingly modest income.
Expert Appraisal & Valuation
In addition to forensic accountants, we may engage expert witnesses to ensure that real estate and businesses are accounted for and properly valued in your divorce settlement.
Litigation When Necessary
When a marital settlement agreement cannot be reached, our trial-proven lawyers know how to build a winning court case. Kaspar & Lugay LLP Partner Brent Kaspar is a Certified Public Accountant (CPA), and Partner Arvin Lugay has advised and represented some of the most prestigious financial and banking institutions in the country in high-stakes litigation. Our firm combines business law expertise, extensive experience in business and commercial litigation, and deep insights forged in the Bay Area tech startup ecosystem to ensure proper asset division in complex and high-net-worth divorces.
Call Kaspar & Lugay LLP For Fair & Equitable Divorce Settlement
Kaspar & Lugay LLP is dedicated to protecting what you are legally entitled to and ensuring fair and equitable asset division in your divorce settlement.
If you plan to divorce, do not leave your financial future to chance. Contact us today to schedule a consultation.
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