If you believe that your soon-to-be ex-spouse will be honest about the disclosure and division of assets and income, think again! According to the National Endowment for Financial Education, nearly one-third of U.S. couples filing for divorce engage in financial infidelity.
Financial fraud in divorce is quite common in the U.S. One spouse may hide or misrepresent assets or steal the identity of their ex-partner to tweak the divorce settlement in his/her favor. Moreover, the sting of failing in a relationship can leave couples too stressed to think of matters such as fraud and identity theft.
Don’t let money matters take a back seat amidst the emotional drama that unfolds during a divorce proceeding. Use the valuable information shared in this post to stay protected from the common financial frauds in divorce.
Know the Different Types of Financial Frauds in Divorce
The dissolution of a marital bond can offer one of the spouses a solid motive and opportunity to engage in financial misconduct before, during, and after the divorce.
Prior to filing a divorce, a spouse may attempt to hide assets, cash, and marketable securities by transferring them to a secret account or a friend or relative. Several individuals engage in the sale of assets to a distant friend or relative at an amount lesser than market value with the intent of reversing the sale after the divorce settlement.
Further, the spouse may engage in tax fraud, asset dissipation, misappropriation of assets, forgery, credit card and loan fraud, and insurance fraud, among others.
Spouses who own a business can manipulate their income and expenses, thereby impacting the final divorce settlement. For instance, he/she may not record cash sales with the intent of underestimating the business income.
Other ways of manipulating business finances are by registering personal expenses as business expenditure, and deferring employee raises and bonuses.
Financial fraud may continue after the divorce. A spouse may attempt to show a decline in his/her income so as to appeal for a reduction in spousal or child support amount. Further, if the spousal support is modifiable, he/she may hide an increase in income or business profits to avoid paying higher alimony.
Divorcing spouses who have deceit on their mind cannot resist the temptation to cheat or lie in order to manipulate the divorce settlement in their favor. Being aware of the various types of frauds in divorce can help you preemptively prepare to combat them and protect your interests.
Shield Your Identity
Divorce is one of the most challenging times in a person’s life when he/she is prone to become a victim of identity theft. Whether you have been married for a year or a decade, you may have several joint accounts with your spouse that you may or may not be aware of. Moreover, your spouse may be keeping a tab on all your emails and online banking passwords, which makes you vulnerable to identity thefts.
First things first, pull out your credit report to take stock of your debts and credit lines. Inform your creditors and lenders of your divorce and remove your spouse as an authorized user of an account, reducing the risk of gathering unauthorized debts.
Close all joint accounts with your ex as these make you both equally responsible for debts. If joint accounts are left open, your spouse can add more debt to them, adversely impacting your credit score and increasing your liabilities.
Keep a close eye on your credit report to prevent instances of identity fraud. Opt for smart features like credit monitoring, fraud alerts, and credit freeze. Credit monitoring will alert you of an irregular transaction in your credit report. Fraud alerts will enable the credit card companies to dig deep before extending credit. And, a credit freeze will prevent your ex from creating new accounts in your name.
Watch out for Red Flags of Financial Fraud in Divorce
A spouse intending to engage in fraud may exhibit several suspicious behavioral changes to rationalize their misdeeds. For instance, he/she may spend hours on the computer and close the screen when you walk in or may get aggressive or defensive about sharing the financial documents.
Besides these common behavioral changes, it is critical to pay heed to the red flags of financial fraud in divorce. You may have a solid reason to suspect your spouse if he/she –
Is secretive about his/her financial matters. Isn’t willing to share the bank account details and online banking passwords. Owns a separate email address or P.O. Box for receiving bank statements and bills. Acts aggressive when asking for your signatures on important financial documents, such as tax statements and deeds. Has a dubious financial advisor (who has lately become his/her close associate). Reports sudden and unexplained business losses or decrease in the value of marital property. Manipulates the income and expenses in his/her favor.
Watch out for these signs of financial fraud in divorce and talk to an attorney who is experienced in handling such cases.
Keep Your Divorce Attorney in the Loop
An experienced divorce attorney knows how to handle divorce cases involving hidden or depreciated assets, forgery, tax fraud, and other forms of financial fraud in divorce.
Hire an experienced divorce lawyer from your neighborhood who knows the local divorce law like the back of his/her hand. Reputed divorce attorneys tend to work with forensic accountants, who can dig out hidden and transferred assets, thereby protecting you from financial frauds.
For instance, if you live in DuPage County of Illinois and your ex-spouse has hidden property through a fraudulent transfer, an Illinois divorce lawyer can help you file a suit against him/her under the Illinois Uniform Fraudulent Transfer Act.
Contact your lawyer if you suspect your soon-to-be ex-partner is hiding or understating assets, overstating debts, and reporting a lower income and higher expenses than the actual amount.
During a divorce, it is usually expected that both the spouses openly and honestly disclose their income and assets, allowing a fair division of assets and debts. Unfortunately, some spouses play dirty tricks to hide or understate assets and income and overstate debts and expenses, thereby leading to an unfair divorce settlement.
In this age when financial frauds are rampant, the tips shared in this post will help you protect your interests when filing a divorce.
Jenna Adams is a certified divorce coach by profession. She is associated with Peskind Law Firm, a law firm offering family and divorce law services to the folks of Illinois. With decades of experience as a divorce lawyer near Oakbrook IL, the team understands the needs of their client. Not only their needs, but they also specialize in everything when things come to divorce and beyond that.
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