A primary concern of many high net worth couples going through divorce is how to preserve assets. We are not talking about how to reduce spending to increase the marital estate to be divided; we are talking about one or both spouses secreting assets so that they cannot be traced and shared with the other spouse. It happens more often than you think.
One common tactic is to move assets to offshore accounts just prior to or right after a party files for divorce. Those with significant assets may take this route because they stand to lose more during a divorce. Some countries in which the wealthy have chosen to hide money and assets from spouses during divorce are known for offering certain advantages. Take a look at some of the most popular tax havens:
- Cayman Islands. The combination of assessing lower taxes on account holdings and client confidentiality makes this a popular place to hide funds.
- Switzerland. Bankers are sworn to secrecy by law when it comes to protecting the identities of their clients, which makes this a relatively safe place to conceal funds.
- Belize. Belize’s heavy privacy protections makes this a relatively safe bet for those looking to hide funds.
Hiding money becomes a risk versus reward dilemma
Most qualified forensic accountants will be able to find evidence of offshore funds to the extent they exist, and if the hidden assets are discovered during the divorce action, the guilty spouse can face severe consequences as his or her credibility would be destroyed. If the hidden assets cannot be accessed for some reason, the Court can require the guilty spouse to pay over other funds to the innocent spouse in lieu of dividing the hidden assets. As such, the benefits simply may not outweigh the potential drawbacks when it comes to hiding assets.
Despite the likelihood or not of discovering hidden assets, the innocent spouse needs to seek qualified legal advice about whether it makes sense to search for them. For example, if you file a joint tax return with a spouse who is hiding assets in offshore accounts that you uncover, you may face fines and criminal penalties. This may wind up being the case even if you were completely oblivious to the existence of the accounts at the time you filed your return.
While hiding your assets from your spouse to prevent losing them in divorce is morally wrong, it is going to continue to happen as long as there are loopholes that allow for it. If you have begun the process of divorce and believe that your spouse may have hidden assets, the matrimonial and family law firm of Berkman Bottger Newman & Schein, LLP invites you to reach out to one of our client-focused divorce attorneys in New York City, Westchester, and Hackensack, New Jersey. Schedule your consultation today by calling 212-867-9123 or reaching out to us through our contact form.
All families and marriages are unique, so there is no such thing as a typical divorce law issue. The New York attorneys at Berkman Bottger Newman & Schein LLP, understand this. We take the time to listen to each of our clients and to understand fully the circumstances of their case. Only then do we advise them of their legal options and suggest the best course of action to resolve their family issues.
Based in midtown Manhattan, our firm serves clients across the greater New York area, including Westchester, Rockland, Nassau, and Suffolk Counties. Read more about Berkman Bottger Newman & Schein LLP.