How To Prove Assets & Income in a Divorce
By Beverly Bird
It’s surprisingly common for spouses to hide assets or income during a divorce. If someone has less income, this usually means he pays less child support or alimony, and if assets “disappear,” the court can’t divide them between you when your divorce is final. If you suspect your spouse is doing this, you might be able to prove it, but it will take diligent effort.
Collect your marital monthly bills dating back to when divorce was not yet an issue. Include mortgage, car payments, credit card bills, and utility bills -- everything you can think of. If you don't have these bills on hand, you or your attorney can subpoena the companies for copies after you've filed for divorce.
Compare the monthly bills against your spouse's claimed income. If you and your spouse regularly serviced $8,000 a month in regular expenses while you were married, and if you earned $2,000 a month, he paid $6,000 a month from his own income. If he claims he only earns $4,000 a month, you can prove he had access to more income, at least during your marriage. The additional $2,000 had to come from somewhere.
Repeat the process with your spouse's current monthly bills, if you've separated. If he won't give you copies of his bills voluntarily, you can subpoena the companies. If he claims to earn less than the monthly bills he's servicing, and the accounts are current, something is usually amiss.
Contact the IRS. Use Form 4506-T to request copies of your joint tax returns going back several years. You'll want to get these directly from the IRS because your spouse may have altered your own copies after he realized divorce was imminent. If your spouse filed separate married returns, you or your attorney may have to ask the court to require your spouse to sign a release so you can get copies from the IRS.
Use the tax returns to identify your spouse's historical income. If his income suddenly dropped after you filed for divorce, he might be deferring compensation from his employer until after your divorce is final. You or your attorney can depose his employer, questioning him under oath, to find out what’s going on.
Proving Hidden Assets
Use your spouse's tax returns to identify hidden assets. If he reported any interest or dividend income from investments, this will appear on his tax returns. He should be admitting to owning a corresponding asset.
Subpoena banks for statements for any accounts in your spouse’s name, especially those he may have opened after you filed for divorce. The statements will show if he’s been writing checks to one or more individuals, repaying "loans" that didn’t exist until you filed for divorce. You or your attorney can depose these people, asking them questions under oath, to determine what the payments were ostensibly for.
Do a public records check for any assets held in your husband’s name, as well as any in the names of any of his family members or friends. Your spouse may have used marital funds to purchase assets that he then titled in someone else’s name, intending to take them back after your divorce is final.
Even if you uncover some evidence that your spouse is hiding income or assets, you'll need definitive proof for the court if your divorce goes to trial. Consider hiring a forensic accountant to review your documentation and to dig deeper, if necessary. This is especially important if your spouse is self-employed, because self-employment offers him many additional ways to conceal funds and property. Make sure it’s worth your while, however. Unless you suspect that your share of hidden assets is more than the accountant's fees, it might not make financial sense to pursue identifying them. However, hidden income usually affects long-term alimony or child support obligations, so it’s often worthwhile to prove your spouse's true income if it seems suspiciously low.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues.