Finding Hidden Income in Divorce Cases


LifestyleAnalysisInDivorceCasesSmallDo you think your spouse may be attempting to hide income or assets in your divorce? One spouse commonly has control over the money in the marriage, either by virtue of being the major breadwinner, or by controlling spending, or both. The spouse in the lesser financial position should take immediate proactive steps to protect herself or himself in the divorce. ex-spouse will have with them. By being aware of some of the most common schemes used to hide income and assets, you may be more likely to see the signs.

Some of the more common schemes used to hide money in divorces include:

  • Stashing cash – It is not uncommon for an estranged spouse to start stashing money around the house, in a safe deposit box, or with trusted friends or relatives. By not keeping the funds in a bank or brokerage account, the spouse is hoping you won’t know of the money’s existence. Pay close attention to transactions that involve cash vaporizing into thin air: large ATM withdrawals, depositing checks but receiving a large amount of cash back, the sale of assets with no paper trail or no deposit to known accounts.
  • Purchasing items that are easily overlooked or undervalued – Everyone notices a new home or a new car, but who is paying attention to works of art, valuable home furnishings, or technological toys? While some spouses are paying close attention to these types of things, many are not, and  this is one great way to reduce cash while secretly increasing hidden assets.

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Divorce Financial Analysis: Investigating Business Interests


When a spouse owns a business, it can create some of the most complicated financial issues in a divorce. It is extremely important to dive into the financial records of the business in order to value it and to determine where the money is REALLY going. Tracy Coenen and Miles Mason discuss what documents a forensic accountant needs to evaluate the business.

Clues to Hidden Income and Assets in Divorce


I often get asked how someone will know if their spouse is hiding income or assets in a divorce. Sometimes it is obvious when a document is discovered or information is leaked by someone in the know. But what if you just have a “feeling” that something isn’t right?

In working with divorcing couples, I’ve found that there are often some telltale signs of trouble. A gut feeling with some objective information is often enough to warrant further research and investigation. What are some of the common clues that I have seen to indicate hidden income and assets?

  • We are suddenly poor: The income-earning spouse has an unexplained decrease in compensation and/or you have gone from regularly having extra money to suddenly having a low balance in your bank account. Beware of the possibility that your spouse is deferring income… having commissions, bonuses, or other compensation withheld until after the divorce is over.

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Using the IRS Expenditures Method to Determine Income


When the IRS believes a taxpayer has unreported income, they will use alternative methods to attempt to determine the true income. One of those methods is the Expenditures Method. Tracy Coenen explains the basic methodology in this video. Note that this method of calculating income can be used in a variety of cases that involve allegations of hidden income including divorce, money laundering, and income tax fraud.

Perfect Audit Review: Terrible Product, Doesn’t Perform as Promised


perfectaudit-ocrolusA few months ago, I was asked to beta test PerfectAudit software by Ocrolus.The software has used other names such as AuditGenius ( now forwards to and Medicaid Genius. Promotional emails are being sent from the domain, which forwards to The company is currently marketing to service providers in the divorce arena, and they say that firms such as Met Life, RGL, and Duff & Phelps are using the site for divorce cases.

The website bills Perfect Audit as a “game changer” for those who depend on data from bank statements and credit card statements. It’s a great concept! PerfectAudit will use OCR technology to pull the data off the statements, put the data into a searchable database, and you have access to data that is guaranteed to be 100% accurate.

But the product is terrible and doesn’t even come close to doing what they say it does. Here is what they say it does: Continue reading

Net Worth Method of Proof: Calculating Income in Divorce Cases


In divorce cases, forensic accountants can use the “net worth method of proof” to calculate income. This is used to search for hidden or unreported income. Rather than simply taking a spouse’s word for it that his or her income is X, we can do an analysis like this to try to verify the claimed income.

This method of proof is one part of a lifestyle analysis, in which we are analyzing the party’s lifestyle and determining if that lifestyle matches the income that is being reported. This video explains the process of completing the net worth analysis.