Often times, one or both litigants in a divorce are of the belief that the other has hidden assets either in contemplation of a divorce or during the actual proceedings. This often occurs when one spouse has not been involved in the financial circumstances of the family, and has no real information regarding the extent of the marital estate.
The financial suspicions of a spouse are often pursued during the discovery portion of a divorce, whereby both sides exchange demands for financial documents. Once the respective attorneys review the other side’s compliance, depositions are usually conducted to seek further clarification regarding the documents, inquire as to questionable transactions and lock the party into a certain answer about the information contained within a document.
When there are suspicions regarding financial maneuvers prior to or during the proceeding, the discovery process may be quite extensive and costly in and of itself. Thus, it is important that a party discusses the basis for his/her suspicion with his/her attorney, in order to avoid the appearance that the discovery requested is not merely a “fishing expedition” or dilatory strategy.
In cases where there have been financial transactions in contemplation of a divorce, there is usually some sort of indicia or paper trial of said transactions. For example, this can be seen on a bank statement showing a transfer to an unrecognizable account or, more glaringly, large withdrawals from an account. Unfortunately, some Machiavellian maneuvers may not be discovered and/or require the retainment of a forensic expert. Regarding the latter, it is important to discuss the validity of the suspicions, as a forensic undertaking is costly and will prolong the action. Said discussion should also include the amount in question, as it may cost more to discover the money you are chasing than the asset itself.
In order to address undisclosed assets, an expertly drafted settlement agreement will include a provision whereby a penalty is assessed against the non-disclosing spouse in the event that same is discovered at a later date. For example, the non-disclosing spouse may have to pay the other a larger percentage of the asset, and any counsel fees incurred in connection with its discovery. While this may seem like little immediate comfort, the inclusion of said provision in the agreement may in and of itself make the other party more forthcoming about the existence of assets, lest he/she lose more of it at a later date.