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How to find hidden assets in your tax returns in a divorce

On Behalf of | May 17, 2022 | Divorce

Divorces can be messy and emotional meaning people may make decisions out of desperation or spite. One of these decisions is to hide assets so they will not be included in the property division process. However, hiding assets is not a good idea and the person hiding assets will generally be caught.

Where are assets commonly hidden

People will go to great lengths to hide assets. There are four basic ways assets can be hidden. One is by denying the assets exist altogether. A second is to transfer the assets to an outside party. A third is to try to say the asset was lost. Finally, a person could create false debts.

How to uncover hidden assets

One way to uncover hidden assets is by looking for a paper trail. Oftentimes there is a paper trail covering up the hiding of assets. For example, look back at past tax returns. Tax returns are relatively easy to locate and access.

What to look for in tax returns

If you are looking for hidden assets in past tax returns, certain red flags should catch your attention. For example, itemized deductions could help you identify assets not disclosed elsewhere. Second, look for assets that generate interest and dividends, including capital gains and losses. This could account for undisclosed assets or assets that have disappeared altogether.

You have a right to community property

California is a community property state, meaning you have an ownership interest in all marital property. Even if your spouse tries to hide marital assets, you still have a right to them. By uncovering hidden assets, you can make sure they are fairly included in the property division process.