Things haven't been going well. For months, you've suspected that your spouse is planning to divorce you. In today's mail, there's a statement from a bank you don't recognize. Your spouse has become secretive with their phone and computer. Lately, your spouse has been fascinated with cryptocurrencies like Bitcoin and Ethereum. There are unexplained withdrawals or expenses from your financial accounts. You're in the dark about household finances, having trusted your spouse to handle the money for years. You suspect your spouse is hiding money and financially cheating. You're worried, and you want to protect yourself!
Is Your Spouse Hiding Money?
When a marriage starts to crumble, some spouses will hide assets to keep them out of reach of their spouse. It's normal for couples to divide the responsibilities of running a household. One may take primary responsibility for the children, cleaning, and upkeep tasks. The other spouse may be primarily responsible for paying bills and managing the community assets. While this usually works fine, it can put you at a disadvantage if your spouse controls the money and is intent on hiding it from you.
Clues Your Spouse May Be Hiding Money from You.
What do you do if you suspect your spouse is financially cheating on you? First, look for "clues" that financial cheating might be occurring. Often, changes in behavior offer insight or clues that your spouse may be hiding assets from you, including:
- Your Spouse Has Become Defensive About Money Issues – if your spouse gets angry or defensive when you bring up money, that can be a clue something is going on. If your spouse controls the family finances and there's nothing to hide, they should be willing to talk and give you a clear picture of what's going on financially. Discussing money issues can be stressful and uncomfortable, but if your spouse is overly defensive or refuses to discuss the finances with you, it may indicate a problem.
- Your Spouse Intercepts or Controls the Mail – if your spouse controls the physical mailbox, this may put you at risk. In today's digital world, the “mailbox” is often an email address where electronic statements are delivered. Regardless of how you receive financial information, if your spouse is controlling or adamant about receiving the financial mail, you may have a problem. If there is nothing to hide, your spouse should be transparent about sharing the financial statements with you. If your spouse recently redirected mail to an office address or post office box, that's a red flag that deserves an explanation.
- You Notice Large or Frequent Cash Withdrawals – if you have noticed frequent cash or large unexplained withdrawals from your banking accounts, this could be a clue something is going on. There's nothing wrong with having a little money on hand for emergencies, but there should be total transparency about it. If your spouse can't explain withdrawals or what the money is being used for, it could indicate that cash is being diverted to a different account or worse, another person.
- You're Totally In The Dark About Your Finances – while it's common for one spouse to be in charge of the marital finances, that does not mean you should be unaware of what your financial assets consist of and where they are located. Giving one person complete control over the finances is never a good idea. What would you do if there was an emergency or a death? Would you know what accounts you have, what the account numbers are, and the passwords? If you're clueless about your finances, you could be in peril even if your marriage is rock solid. You must educate yourself about the family finances.
How Do You Find Out if Your Spouse is Hiding Money From You?
If clues are pointing to financial cheating, you should immediately arm yourself with information about your accounts and assets, particularly if your spouse is controlling or refuses to share the information with you. Even if your spouse is “sharing,” you must ensure that ALL the data is being provided, not just what they want you to see. Here are some tips to ensure you're getting the complete financial picture.
- Go to the Source – in family law, the “gold standard” about finances is the total income being received. Family law courts routinely order the exchange of W-2s, 1099s, K-1s, and complete Tax Returns (including all supporting schedules). Importantly, parties to a divorce are routinely ordered to exchange pay stubs, which can be a goldmine for determining whether money is being diverted. Direct deposit information often appears on a pay stub. If your spouse is routing a portion of their paycheck into a separate account, that information should appear on the pay stub.
- Obtain Complete Copies of Banking and Brokerage Account Records – if possible, you should try and obtain complete sets of all banking, savings, brokerage, and retirement account records. Both parties in a divorce case must disclose this information, but to the extent that you can obtain these records on your own, you would be well advised to do so. Most of these records are available for download online (assuming you have online account privileges). If you are worried that your spouse is hiding money from you, arm yourself with this information now.
- Obtain and Review Credit Card Statements – like bank statements, credit card statements, including year-end reviews, are readily accessible online. These statements can be highly revealing and may show transfers or payments to accounts and vendors you don't recognize. If payments for the credit card account are being made from a bank account you don't recognize, that could be a red flag that your spouse has other accounts you should investigate.
- Don't Forget Other Online Accounts – be sure to be on the lookout for other online financial accounts such as PayPal, Square, Venmo, Zelle, CashApp, Coinbase, and Strike, to name a few. One way to look for this type of account is to check the favorites or browsing history on a shared home computer. Just ensure that you are authorized to view information on the computer and that you're not violating any privacy rights. Never “hack” an account or use keystroke recording software or other devices to obtain user passwords. This can get you into serious legal trouble, including hefty fines and criminal penalties, so don't do it!
- Check Out Our Other Blog Posts – be sure to check our other blog posts for helpful information. I recommend reading one in particular, “I May Have to Go Through A Divorce,” which contains multiple tips to help you prepare for a divorce, just in case it becomes a reality. A little preparation and knowledge are always good things.
You've Uncovered Fraud and Asset Hiding. What Can Be Done Legally?
If you've discovered that your spouse has been financially cheating and hiding money or other assets, there are legal remedies potentially available that may provide you with much-needed relief. If adequately pled and after hearing testimony and evidence at trial, if it's determined that a spouse has committed actual or constructive fraud on the community, the Court shall “reconstitute” the community estate by calculating the value by which the estate was depleted as a result of the fraud on the community. The Court then calculates the amount of the “reconstituted estate” and divides the value of the reconstituted estate between the parties in a manner the Court deems just and right.
In making a just and right division of the reconstituted estate, the Court may grant any legal or equitable relief necessary to accomplish a just and right division, including:
- awarding the wronged spouse an appropriate share of the community estate remaining after the actual or constructive fraud on the community;
- awarding a money judgment in favor of the wronged spouse against the spouse who committed the actual or constructive fraud on the community; or
- awarding the wronged spouse both a money judgment and an appropriate share of the community estate.
Basically, the Court calculates the value of the reconstituted estate – that is, the total value of the community estate that would exist if fraud on the community had not occurred - and then divides the value of the reconstituted estate between the parties in a manner the Court deems just and right by granting any necessary legal or equitable relief.
What does this mean in practical terms?
By way of example, suppose the parties have a bank account worth $200,000. One of the spouses has depleted that account through fraud or waste, and the value is now zero. Further, assume there is a community home valued at $200,000. Absent the fraud, the estate would have been valued at $400,000, but because of the fraud, there is now only $200,000 in assets remaining. A Court in this situation can reconstitute the estate to add back in the depleted account's value as if the fraud never occurred. The reconstituted estate would now be worth a total of $400,000. But instead of splitting the value of the house 50-50, the Court could award the entirety of the $200,000 home to the innocent spouse and the value of the depleted account to the spouse that committed the fraud.
What Should You Do?
If you suspect your spouse has committed fraud, you should contact an experienced divorce lawyer. Finding hidden assets is challenging, and you'll want an experienced family law attorney on your team to help you expose the financial cheating and present your fraud claim to the Court. With the right divorce attorney, you can better protect yourself and your property.
And, importantly, when it comes time to negotiate and mediate a case with complex issues involving fraud, asset hiding, or division of special assets like cryptocurrencies, you'll greatly benefit from the help of an experienced mediator who understands the nuances of the law and practicalities of trying cases with these issues.
Armatys Millard Is Here to Help!
Walter Armatys and John Millard have significant family law experience, both as trial lawyers and as Family Court Judges. This judicial experience gave Walter and John a keen insight into how Judges think, what persuades them, what annoys them, and, importantly, what information Judges need to make an appropriate ruling. Armatys Millard provides mediation and arbitration services for family law disputes pending in Fort Bend, Harris, and surrounding counties. You can count on our extensive family law experience and judicial wisdom to help successfully resolve your case.
CONTACT US NOW
If you need to mediate or arbitrate a divorce, custody dispute, or other family law issue, Armatys Millard, PLLC can help. Check availability and book your session online or call our office at 281-313-6800. We're here to help!