Financial Deception and Divorce

The end of a marriage can be a very distressing time, especially if one spouse discovers that the other one was unfaithful. While many people think of infidelity as romantic infidelity, there is another type of infidelity that can be equally, if not more difficult to comprehend: financial deception. This is where one spouse makes certain financial decisions or conceals assets from the other. It can happen both during the marriage and the divorce process.

In this guide,we’ll explore what financial deception looks like, how it impacts divorce settlements, and what steps you can take if you suspect your spouse is being financially dishonest. 

What Is Financial Deception?

Financial deception occurs when one spouse intentionally withholds or misrepresents financial information to gain an unfair advantage during a divorce. This can involve hiding assets, inflating liabilities, or misreporting income to manipulate the financial settlement. The goal of financial deception is usually to reduce the financial obligations that one spouse must pay, such as spousal or child support, or to retain a greater portion of the marital property during the process of property division – all of which are critical parts of the divorce agreement. 

How Does Financial Deception Work?

During the divorce process, you will both fill out a financial statement form. You are legally required to provide detailed information about your income, assets, debts, and expenses. However, there are a lot of ways that one spouse might try to deceive the other about the financial situation. 

Hiding Assets

One of the most common forms of financial deception in divorce is the concealment of assets, where a spouse intentionally hides money, property, investments, or valuable items to prevent them from being included in the divorce settlement. This can be done through various methods, such as:

• Transferring assets to friends or family.
• Opening secret bank accounts.
• Underreporting income.

Hiding assets is even more prevalent in the area of digital assets like cryptocurrencies.

Inflating Debts

Another form of financial deception involves inflating debts or liabilities. A spouse may create or exaggerate debts in order to reduce the value of their assets or to offset the amount they are entitled to in a divorce settlement. For example, a spouse may claim that they have substantial credit card debt or fake loans to reduce the amount of property they are required to divide.

Manipulating Business Valuations

Manipulating business valuations is a particularly insidious form of financial deception that can significantly impact the division of assets in a divorce. When one spouse owns a business or holds significant investments in a company, they may attempt to manipulate the financial information related to that business to artificially lower its perceived value. This is often done by: 

• Understating profits.
• Overstating expenses.
• Claiming fictitious losses.
• Delaying contracts or income until after the divorce is finalized.

These strategies are all utilized to make a business appear less valuable than it truly is. 

What Can I Do About This?

To effectively address financial deception during a divorce, it is crucial to take several steps to uncover hidden assets and protect your financial interests. 

Consider hiring a Skilled Massachusetts Divorce Attorney

An experienced Massachusetts divorce attorney can help you identify potential signs of financial fraud and work with you to ensure your rights are protected. They’ll know how to gather the necessary documentation and advocate for a fair settlement.

Your spouse can get into major trouble lying to the court. Intentionally failing to disclose assets or income or hiding assets during a divorce can have serious consequences for the deceptive party. These actions can be illegal and may constitute perjury, contempt of court, or fraud, which can lead to significant legal repercussions, including potential criminal charges. Additionally, hiding assets or withholding financial information can severely damage your spouse’s credibility with the judge, which could result in a division of assets that is very unfavorable for them.

Work with a Forensic Accountant 

Forensic accountants are trained to uncover financial fraud and have specialized knowledge and skills to track down hidden assets, income streams, or financial transactions that may not be readily apparent. They analyze:

• Tax returns
• Bank statements
• Investment accounts
• Business records
• Real estate holdings

In addition to their investigative capabilities, forensic accountants can also help uncover patterns of financial manipulation, such as misreported income, inflated expenses, or suspicious transfers of assets. They utilize advanced tools and techniques, including data mining and forensic analysis software, to trace hidden funds or uncover financial activity that may otherwise go unnoticed.

You Might Not Know the Scope of Your Marriage’s Financial Situation

Even if you played an active role in making financial decisions within your marriage or were the one “in charge” of managing the household finances—whether it involved tasks like filing taxes every year, balancing the checkbook, or handling day-to-day budgeting—it’s important to acknowledge that you cannot be entirely sure you know everything that’s going on financially within your marriage. Financial deception can be subtle, and even if you were closely involved in financial matters, your spouse might still have hidden assets, secret debts, or income streams that you were unaware of. For example, while you may have been responsible for tracking monthly expenses and paying bills, your spouse may have been involved in financial ventures or transactions outside of your knowledge, such as opening a hidden bank account, acquiring assets in secret, or using financial instruments that were intentionally kept from you.

Contact a Massachusetts Divorce Attorney

If you suspect financial deception during your divorce in Massachusetts, don’t face it alone. It is important to contact an experienced divorce attorney who is well-versed in handling cases involving hidden assets or financial fraud. A Massachusetts divorce attorney can help guide you through the complexities of divorce proceedings while ensuring that your financial interests are protected. Reach out to us today.