California residents seeking to get a divorce might be interested to hear that sometimes spouses attempt to hide money from their businesses. One forensic accountant from Los Angeles says that he makes a career out of finding hidden money in divorces. He helps uncover any instances where one spouse may be hiding income from the other to try to shortchange them on the divorce settlement.
The forensic accountant stated that estranged spouses are sometimes willing to squeal on their spouses when they know that they are using company funds. Their motive in telling is usually to try to get a betterdivorce settlement.
California is a state that follows community property laws. Community property laws essentially mean that spouses must split all their assets, including business ones, unless otherwise stipulated in prenuptial agreements. The forensic accountant stated that while fraud may be initiated to save money on taxes, spouses might continue it in an effort to decrease the value of the business so that their spouses won’t get as much in a divorce settlement.
The forensic accountant reports that business owners might take a variety of routes to attempt to hide money. For instance, they might inflate their business’s expenses or understate its revenue. Another method is for business owners to take payments in cash. Other spouses engage in outsized spending. In other words, while their business reports a modest income, they live a lavish lifestyle.
Those who are seeking divorces might benefit from the representation of divorce attorneys. Divorce attorneys might be able to help spouses uncover any hidden monies to ensure that they receive a fair divorce settlement. They might also be able to help them to negotiate other issues, such as alimony, child custody and child support.
Source: Bloomberg, “Hunting for Hidden Cash In Divorce Proceedings“, Ben Steverman, June 03, 2013