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Exposing Hidden Assets in an Ohio High Net Worth Divorce

Exposing Hidden Assets in an Ohio High Net Worth Divorce
May 10, 2016 Shannon Dawes
How to prepare for a divorce in Ohio

The resolution of financial issues in an Ohio divorce will have a profound financial impact on the standard of living and financial security of both spouses and their children. The complexity of these fiscal issues increases exponentially in high net-worth divorce proceedings. Many affluent divorcing couples are business owners or otherwise self-employed. Spouses that derive their income from sources other than hourly wages or salary on a W-2 often understate income, hide assets, and otherwise attempt to manipulate the outcome of financial matters in a marital dissolution, such as alimony (referred to as “spousal support in Ohio), property division, and child support.

The process of “smoking out” hidden assets and underreported income in a divorce is one of the most important and challenging tasks in a martial dissolution involving a high-value marital estate. If the divorce has been planned for a reasonable period before the actual commencement of the proceedings, a spouse might transfer marital assets (e.g. assets purchased from business earnings during the marriage) to third-parties, fail to make disclosure of cash payments, or acquire assets with a straw purchaser. Whether a third-party, straw purchaser, or falsified documents are used to prevent a judge from considering specific assets or a portion of income, effective use of discovery tools is essential to facilitate an equitable division of marital assets, as well as appropriate spousal support and child support orders.

Use of Discovery to Uncover Hidden Assets and Income

Our Columbus divorce lawyer recognizes the cost of discovery must be weighed against the financial benefit. When the value of an estate is substantial, more intensive discovery efforts often will be justified. The discovery process might start with interrogatories, subpoenas, depositions, and document production requests. If your spouse fails to comply with these discovery tools, our law firm will often file a motion to compel production of the information or documents, which asks the judge to impose sanctions for non-compliance.

In some cases, more extensive investigation techniques might be necessary. Our divorce lawyers routinely look beyond the raw numbers in tax returns, profit and loss statements, bank records, credit card invoices, and similar financial documents. When we identify discrepancies or trace funds, this information can be used to expose misrepresentations or non-disclosure of assets or income by a spouse. A meticulous review of the documents or tracing might expose efforts to divert income or assets to other entities or individuals.

Strategies to Prevent an Equitable Distribution of Marital Property

The tactics used to prevent an equitable distribution of marital property vary widely depending on the nature of the property or funds a spouse is trying to keep from the purview of a spouse and judge. Some examples of approaches a spouse might use to prevent fair orders regarding marital property, alimony, or child support include:

Placing Assets in the Names of Others: Personal property, vehicles, investment certificates, and other assets might be titled in the name of relatives, friends, or closely connected business entities. Investment certificates, cash, and other assets might be hidden in a secret safety deposit box.

Deferring Bonuses, Commission, or Other Compensation: A spouse might arrange with an employer or company to defer bonuses, stock, commissions, or other compensation or benefits temporarily to reduce the total value of a compensation package.

Phony Personal Loans: Personal loan payments that you do not recognize should be carefully scrutinized. Phony loans from business associates, friends, or relatives might be fraudulent, which means so-called “loan payments” are just a strategy for hiding funds.

Undervaluing Businesses: There are multiple methods of valuing a business. The estimated value of a business might be distorted by under-reporting revenue on financial statements, P&L’s, and tax returns. Assets also might be kept off the books to depress the value of the business. In some cases, a business valuation expert might need to be hired to prove that a spouse is misrepresenting the value of the business.

These are just some of the ways that spouses hide property and funds in high net-worth divorces in Ohio. If you have questions about the equitable distribution of property in a divorce, we welcome the opportunity to talk to you and answer your questions. We invite you to call Dawes Legal, LLC at 614-733-9999 or submit an inquiry form through this website to schedule your initial consultation right here.