Recognizing Deceptive Tactics in a High Net Worth Divorce

Dividing property in a divorce is a complex process, particularly when it involves high net worth couples. This term generally refers to spouses with over $1 million in liquid assets. In Arizona, all assets acquired during the marriage are considered community property and subject to equal division. The prospect of sharing wealth leads some spouses to resort to using deceptive tactics to conceal assets or to take other measures to put assets out of reach of the other spouse.

The following are some common methods spouses might employ in a high net worth divorce where there is no agreement on division of property:

• Investments — Funds may be channeled into private investments or financial instruments that do not generate typical tax-reporting forms. This could involve startups, real estate or art collections and other ventures that obscure the source of the invested funds.
• Fraudulent transfers — A spouse might gift or sell assets to third parties, such as friends, family members or business associates, with the intention of getting them back after the divorce. The timing of such transfers, as well as a sale price well below market value, may signal that they are designed to prevent division of those assets.
• Offshoring — Moving funds to countries with strict banking privacy laws is another strategy to conceal wealth. This tactic often involves complex offshore structures and legal loopholes, further complicating the discovery of these assets.
• Hiding cash — Physical concealment in safety deposit boxes is a classic method of hiding cash, since there are no bank records of the box contents. Cash can also be hidden in a home safe or another secret location.
• Underreporting income —This can involve misrepresenting earnings, bonuses or financial assets on official documents, making it difficult for the other spouse to ascertain their true value.
• Overstating or fabricating debts — By exaggerating mortgage obligations, loans, or credit card debts, spouses can present a misleading financial picture. A spouse might also create fake debt, that is, borrowing money with the intention to repay it after the divorce.
• Delaying receipt of bonuses or stock options — A spouse might seek to postpone the payment of vested bonuses or stock options until after the divorce is finalized.
• Overpaying taxes — A spouse might intentionally pay too much in taxes or fail to claim deductions, with the expectation of receiving a substantial refund after the divorce.

If you are amid a divorce and suspect that your spouse is using any of these methods to deny you your rightful share of assets, you should take special efforts with the aid of capable professionals. You need a qualified Arizona divorce attorney who can use discovery tools and subpoenas to gain information about your spouse’s finances. Your attorney can enlist a forensic accountant for help in analyzing financial records, tracing money flows and identifying discrepancies.

At Clark & Schloss Family Law, P.C. in Scottsdale, we have wide experience representing spouses in high net worth divorces throughout Arizona. Contact us online or call 602-789-3497 for a consultation.