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Hiding assets upon divorce

Hidig assets can break families

This blog has been written by a woman about Husband’s but of course, we recognise that Women can hide assets too”

The Group Hug Ltd

‘A dishonest husband is as much a fraudster as Bernard Madoff.’

Martin Kenney. Asset Recovery Specialist

When the Domestic Abuse Bill gets passed into law by Parliament later this year (2019), it will introduce the first-ever statutory government definition of domestic abuse. Domestic abuse is a gendered crime and women across the country should be hugely relieved that this definition will now include economic abuse, along with controlling and manipulative non-physical abuse.

Economic abuse will be defined as any behaviour that has a substantial adverse effect, (i.e. through control, exploitation and/or sabotage) on a partner’s ability to acquire, use or maintain money or other property, or to obtain goods or services.

The government has also committed to ensuring different types of relationships are recognised in the legislation, including family members, ex-partners and those who are not cohabiting. In the statutory guidance the government will also make clear that economic abuse doesn’t just mean interfering with a partners access to money and finances but includes interfering with their access to money, food, transport and housing – for example, restricting the use of a car or ruining credit ratings.

These very welcome changes to the definition have come about because of the tireless campaigning by the charity Surviving Economic Abuse. The charity has evidenced that such behaviour creates economic instability and acts as a barrier to victims leaving and rebuilding their lives.

One area that still needs to be particularly recognised in the Bill though – and is an area that requires more women to come forward and share their experiences about – is the way intimate partners, whether previously abusive within the relationship or not, will often use the Family Court system to perpetrate post-relationship economic control against their former partner.

Using the courts as a weapon undoubtedly includes issues to do with child contact and some of you may have seen some grass-roots campaigns that are underway on social media to raise awareness about that issue. However, for this article I want to specifically concentrate on the ways in which former partners may deliberately set out to defeat their wife’s claim to a fair and just division of financial wealth and assets.

Hiding wealth often begins way before divorce

Although it is enshrined in law that both partners must make full and frank disclosure of their financial situation, unfortunately there are still ways – many of them totally legal – for a partner to ensure a spouse is financially disadvantaged. This is not necessarily just a form of greed but is often a way for a dominant, controlling spouse to keep the ex-spouse within his ongoing power. It may even cause her to cave into certain demands for a settlement for fear of being left in debt.

Some of the ways that economic control is perpetrated are currently totally legal. Others are illegal but many spouses seem to take the risk anyway.

It is particularly important to recognise for example, that a controlling partner will often covertly start ‘restructuring’ his finances at the merest hint of suspicion that his partner may be about to leave him (or knowing he intends to leave her). According to the forensic accountants, whose job it is to search out hidden wealth/assets, a two or three year period prior to a divorce filing is a critical period.

the hiding of assets and economic abuse can leave families broken

The problem is if you suspect your partner may be up to something and so you go looking for evidence of any kind of subterfuge, the current laws and procedural rules dictate that not only may it be inadmissible but, if you have a particularly vengeful ex, if he takes separate legal action against you for violating his privacy or smearing his reputation, it is you who may end up in court, facing a fine, or even a prison sentence.

Now, nothing in this article should be construed as legal advice about what you can or cannot do to ensure that there is no behind the scenes manoeuvring of wealth and assets going on. Each case is different and you should always seek legal advice.

You may be able to get freezing orders and other legal processes in place. However, I can tell you that, many women are still under the false belief that a ‘fair division’ of assets is 50% of everything. 50% is a starting point but not a certainty. It would be foolhardy to believe that you have some automatic right to half of everything – especially if your 50% becomes 50% of not a great deal, if what you hadn’t reckoned on was your partner using ways to hide his true net worth and legally divest himself of assets.

There has been a lot of progress in obtaining greater equality for women in recent years: certainly there have been great strides towards closing the gender pay gap, calling out discrimination and obtaining better diversity, but one area of the law that does not appear to have moved with the times, is in this area of financial shenanigans within the divorce process. Please try and get involved in campaigning for an inquiry to be opened into these inequalities, and raise awareness where you can.

In the next section I am going to share with you the first 10 points, from a list of well over 20 that may open your eyes to ways in which wealth is routinely hidden or dissipated.

How do they hide their wealth?

  1. Underreporting income on tax returns and financial statements.
  2. Using complicated tax structures here and offshore, sometimes deliberately overpaying tax to deplete income and then delay reclaiming it.
  3. Spending more time abroad – he may be depositing money or buying himself goods or even renting accommodation to hide assets.
  4. Prepaying insurance policies (especially ones that pay interest).
  5. Claiming debt repayment for a phony debt (probably to a friend).
  6. Undervaluing marital assets such as artwork, antiques, guns, wine, tools.
  7. Allowing a business, rental property or second home to run down or run into disrepair, or remain empty, so as to lower its value.
  8. He may secretly transfer his funds and assets and remove himself from obvious ownership of them. A nominee trust is an arrangement whereby one or more persons appoint a “trustee” to be listed on legal title, or other documents, on their behalf. One use of the nominee trust is to avoid reporting the ownership of property on the public record. Trusts are the main way that a spouse may seek to tie up larger sums of money, out of the reach of the court. (There is more transparency coming but it’s not in place yet).
  9. He may deliberately leave his job or remove himself from streams of income so that he can claim he is unable to pay spousal maintenance.
  10. He may feign a gambling problem.

Please visit coercive-control.com to see the rest of the list.

On the site you can also read about what forensic accountants do and how you can engage in some (legal) forms of super-sleuthing. There is strength in numbers and the more women who come together to call-out all forms of post-separation control, the better. Campaigning for change via SEA will ensure that women truly can move on and begin to rebuild their lives after divorce.

Please note: There are legitimate reasons for having offshore accounts and companies. I do not suggest or imply that anyone who has one is doing anything illegal. Tax avoidance is legal, tax evasion is a crime. Non-disclosure may be a crime, check your individual case with a lawyer.

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