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How to Trace Hidden Income or Assets in Divorce

March 14, 2023

A common question in divorce cases is how an attorney can trace hidden income or assets. If you suspect your spouse is hiding money, you want proof to ensure it is considered in dividing your marital property and determining alimony and child support. In a divorce proceeding, the parties must exchange detailed financial documentation. Those records must then be analyzed by your lawyer and other experts that may be brought into the case to look for clues as to whether there are missing funds and if so, where to locate them.

Discovery of Financial Information in Divorce

Early in your divorce case, your attorney will request financial information from your spouse as part of the discovery process. This will include bank and retirement accounts, insurance policies, individual and business tax returns, payroll statements, W-2s, 1099s, credit card statements, and other relevant financial documentation. The discovery should be carefully tailored to your circumstances. For example, if your spouse has a business, then all related records will be needed, such as travel and business expenses, general ledgers, operating agreements, retirement plan contributions and distributions, vesting schedules, tax payments and refunds, financing documents, and leases.

Other Sources of Financial Information

You should inform your attorney if you know of any accounts or property your spouse has or if you have copies of financial records in your possession. This information will also need to be reviewed to determine whether it may indicate hidden income or assets and to double-check against what your spouse produces.

Your attorney and/or financial experts may also conduct internet, public record, and proprietary database searches to look for financial information.

Tracing Income or Assets in Divorce

After gathering all records, your attorney and/or financial experts can conduct a high-level tracing analysis of the information. For example, your spouse’s income and expenses can be reviewed and compared to bank balances to determine whether income may have been funneled to other individuals or accounts. Pay statements can be traced to financial accounts to determine where paychecks are deposited. 

If this analysis reveals suspicious activity, the next step is to expand discovery. This could include requesting additional document production, interrogatories (requests for your spouse to answer a list of questions in writing), depositions, or other discovery.

Sometimes, this may not be enough to identify all hidden income or assets. In that case, it may be advisable to bring in forensic and valuation experts. Such experts can provide invaluable assistance in determining actual income, analyzing expenses, valuing businesses and complicated compensation structures, and tracing offshore and foreign investments.

A private investigator may also be helpful to look into the activities of your spouse that may indicate money is being diverted. 

Hiring an Experienced Divorce Attorney

If you are considering divorce, it is important to work with an attorney who understands the types of income and assets you and your spouse have and can help you obtain a fair outcome in your case. Our attorneys regularly handle high-net-worth divorces advocating for our clients in negotiations and litigation. Contact us to learn how we can assist you with your divorce.

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