6 Ways Minnesota Lawyers Find Hidden Assets During the Divorce Process
No two divorces are exactly the same. Each one involves unique facts that can significantly affect the outcome. However, there are some common patterns that courts see over and over again.
One of these patterns involves sudden business troubles, where a spouse who ran a successful business suddenly claims the business is struggling. Another occurs when a spouse suddenly makes unexplained asset transfers to family members or friends. Yet another is when bank account information or other financial documents go missing.
Each of these patterns is a red flag. It’s a sign that a spouse could be hiding financial assets to avoid dividing them with their ex in the divorce. You may think this only happens in high-asset divorces, but it can happen in relationships of any financial status.
Here’s what happens when our attorneys spot those red flags—and what they do to locate hidden assets during a divorce in Minnesota.
1. Leveraging the Discovery Process During a Minnesota Divorce
In the Minnesota divorce and custody process, there’s a time for “discovery,” when the parties exchange information either informally or formally. Informal discovery relies on the spouses voluntarily sharing information and financial documents.
Formal discovery is more time-consuming and expensive, but it may be necessary if your lawyer suspects the other party is hiding assets. If your spouse isn’t disclosing the needed information, the formal discovery process may involve tools such as:
- Requests for production: Legal demands for documents, including bank statements, business records and tax returns.
- Interrogatories: Written questions that the spouse must answer under oath, which can be about highly specific financial information.
- Depositions: In-person sworn testimony based on questions the spouse must answer under oath.
2. Searching Public Records to Discover Real Estate Holdings
Purchased real estate must be recorded in public records. Lawyers often review these records for real estate holdings, business registrations and other property that may not be listed on the spouse’s financial disclosures.
3. Tracing Digital and Physical Assets
There are many ways to hide assets. Lawyers sometimes investigate cryptocurrency holdings, offshore accounts and other digital assets. They also look for other tangible property, such as artwork, valuable jewelry or vehicles, that may not be disclosed in the divorce the way they should be.
4. Inspecting Corporate and Business Records
Many divorces that involve hidden assets also involve a family-owned business. Why? Because the relationships and record-keeping in those businesses often make it relatively easy to conceal assets.
Small family businesses often have more flexible accounting practices and fewer external audits than larger companies. This can make it easier for someone running the business to obscure financial details. Common tactics include:
- Underreporting income: By failing to record cash transactions or by delaying new contracts until after the divorce is finalized.
- Exaggerating business expenses: By making fake vendor payments, overpaying suppliers or even creating non-existent employees.
To uncover hidden assets in businesses, lawyers can subpoena business records, including profit and loss statements, payroll records and contracts. They can review tax returns and financial statements, and they can audit bank accounts.
5. Bringing in Experts Who Can Locate Hidden Assets
Sometimes attorneys partner with forensic accountants, who specialize in uncovering hidden or misrepresented assets. Forensic accountants analyze financial records for irregularities. They track cash flow and identify concealed assets through complex financial investigations.
In a divorce, a forensic accountant may thoroughly review financial records to identify hidden assets and determine a spouse’s true net worth. This can help ensure a fair and equitable division of assets and liabilities. Plus, it will make sure that the court calculates support payments fairly.
If your attorney hires a forensic accountant, that person will likely conduct a complex investigation into your financial situation. They’ll also be prepared to testify as an expert witness at trial on financial matters such as asset valuation, child support and spousal maintenance calculations.
6. Lifestyle Analysis: Your Spouse’s Reported Income vs. Their Lifestyle
Sometimes, a spouse’s words don’t match their actions. They say they’re broke, but they post lavish vacation photos on social media. Or your spouse says that the business is losing money, but you notice they’re driving a new car. Or your kids tell you that your ex’s new boyfriend or girlfriend just received a new luxury item as a gift.
In these cases, your divorce lawyer may be able to conduct a lifestyle analysis. The analysis would reveal inconsistencies between a spouse’s reported income and their actual spending habits.
Your lawyer will look at how you and your ex lived during your marriage. They’ll identify discrepancies that suggest financial dishonesty. In doing so, they may uncover:
- Unreported income or hidden cash flows
- Undisclosed assets
- Manipulated business income
- Third-party transfers to family, friends or shell companies
- Unreported cryptocurrency or digital assets
What Happens if My Spouse Tries To Hide Assets?
If your lawyer discovers that your spouse is hiding assets during your divorce, they’ll address it in court.
Minnesota courts use an “equitable distribution” model to distribute assets and debts in a divorce. They aim to be fair and just, even if that doesn’t necessarily mean a 50/50 split. But courts are unable to divide things fairly when one spouse refuses to play fair.
Again and again, Minnesota courts have taken action against spouses who are found to be hiding assets. Attempts to hide assets have resulted in penalties, adverse judgments, and even forced liquidation of assets.
But people only get in trouble when they get caught, and catching hidden assets requires counsel from an experienced family law attorney.
Account for Every Dollar With White & Associates
If you suspect that your spouse is not playing fair, take action as soon as possible. Reach out to our legal team at White & Associates for help. We handle Minnesota divorces involving hidden assets, child custody, and more.
Our Elk River law firm stands by our clients to help them get the best possible results in complex family law matters. To learn more about our services, call us at 763-241-0477 or contact us online.
