Navigating Hidden Assets in Divorce: What to Do If You Suspect Fraud

Dividing assets in a divorce should be a fair process, but unfortunately, some spouses attempt to conceal property or financial accounts to avoid sharing them. If you suspect your spouse is hiding assets, it’s crucial to take the right steps to uncover the truth and protect your financial interests. Here’s what you need to know about detecting hidden assets and the legal recourse available if fraud is involved.

Signs Your Spouse May Be Hiding Assets

Before taking action, it’s important to recognize potential red flags that may indicate financial deception:

• Unexplained withdrawals or transfers from joint accounts.
• Sudden changes in financial behavior, such as opening new accounts or excessive cash transactions.
• Undervaluing assets, including businesses or real estate.
• Delaying income or bonuses until after the divorce is finalized.
• Transferring money to family or friends, only to reclaim it later.

If you notice any of these behaviors, it may be time to dig deeper into your spouse’s finances.

Steps to Uncover Hidden Accounts or Property

1. Gather Financial Records

Start by collecting copies of bank statements, tax returns, investment accounts, and business records. Reviewing past financial history can help identify discrepancies or missing assets. Look for inconsistencies, such as reported income that doesn’t match spending habits.

2. Review Tax Returns

Tax returns are a valuable tool for uncovering hidden income or assets. Pay close attention to:

• T5 Slips – Reports interest and dividends from bank accounts and investments.
• T2125 Statement of Business or Professional Activities – Discloses self-employment income, business profits, and losses.
• Rental Income (T776 Form) – Details income from rental properties, which may indicate undisclosed assets.
• Capital Gains (Schedule 3) – Shows profits from selling investments, real estate, or other assets.

If your spouse reports income sources or deductions you weren’t aware of, it may signal hidden assets that need further investigation.

3. Monitor Unusual Transactions

If you have access to joint bank accounts, keep an eye on transactions that seem out of place, such as large withdrawals, wire transfers, or payments to unknown entities. Also, check for recurring expenses like storage units or safety deposit boxes, which may be used to conceal valuables.

4. Work with a Forensic Accountant

Forensic accountants specialize in analyzing financial data to uncover hidden accounts, offshore investments, and business assets. If your spouse owns a business, a forensic accountant can investigate undisclosed revenue, fraudulent bookkeeping, or underreported income.

5. Request a Court-Ordered Financial Disclosure

If you suspect financial deception, your lawyer can request a formal financial disclosure through the court. This legally obliges your spouse to provide full transparency about their assets, debts, and income.

Legal Recourse If a Spouse Conceals Assets

Hiding assets in divorce is not only unethical—it’s illegal. If your spouse is caught concealing finances, they may face severe legal consequences, including:

• Court-imposed penalties or fines.
• Loss of credibility in divorce proceedings.
• Reallocation of assets, meaning the court may award you a larger share to compensate for the deception.
• Criminal charges, in extreme cases of fraud.

Protect Your Financial Rights

Uncovering hidden assets can be challenging, but you don’t have to face it alone. If you suspect your spouse is concealing assets, legal guidance is essential.

Need help protecting your financial interests? Contact me today at (416) 782-7999 or marcy@marcysegallaw.com for expert legal advice.