Honesty is a rare quality in people going through divorce. Yet many spouses are conned into taking their soon-to-be-exes' words at face value and assume that there's no reason to get lawyers involved. Although some divorces can be handled in that manner, it's impossible to know when your trust will be rewarded and when it will leave you burned.
Many times, a divorcing spouse will encourage their partner to complete divorce proceedings without any legal involvement. A big risk in agreeing to this is that your spouse may be hiding money from you, and if you are none the wiser, you won't get compensated for your fair share of those assets. Divorcing individuals in Washington have been burned before, and without legal aid, the odds are even higher.
Unfortunately, the IRS isn't a reliable safety net because the organization often fails to identify and address "hidden" income, mostly because the time and resources required are too great to justify the end result, in most cases. That leaves divorcing spouses on their own to cover their bases. Fortunately, there are a few warning signs that every divorcing individual should watch for.
First, take stock of your spouse's current standard of living and living expenses, and compare that with his or her reported income. If the two aren't aligned with one another, something's amiss, and it could be that he or she is under-reporting income or living off finances you aren't aware of.
You are more likely to get fooled by hidden finances if you weren't the one handling the money in the first place, or if your spouse was involved in finance professionally. Self-employed individuals are a particular risk, since they can modify revenues, profits and other factors to distort their financial picture.
Regardless of whether you notice unusual financial activity, it's worth contacting a divorce lawyer. A good attorney can offer guidance on how to learn more about hidden finances and protect you from getting swindled in the divorce settlement.
Source: Huffington Post, "Signs That Your Soon-to-be-Ex May Be a Secret Cash Stasher," May 16, 2012