Unfortunately, it’s a familiar theme in some North Shore divorces: One spouse tries to hide wealth from the other.
Common ways to try to conceal assets in divorce
- Stashing cash: It requires no sophisticated locks or technology, but this simple method can be effective.
- Pricey possessions: A pre-divorce spouse starts buying expensive watches, jewelry, art, etc. The items are either hidden or undervalued so that they be sold post-divorce.
- Delayed bonus or promotion: The deferred compensation is cashed in after the divorce.
- Cash income: This isn’t reported to the IRS or spouse.
- Paying off a “loan”: Your spouse claims that he/she must start paying off a loan to a family member or friend. The money is paid back after you’re gone.
A new means of keeping wealth secret has emerged, however: Cryptocurrency.
It’s estimated that more than 20 million Americans now hold portions of more than $2 trillion in cryptocurrency.
From Maserati to Madden
Right now, digital currency is typically purchased as an investment, but it can also be used to buy everything from big-ticket items such as cars, travel, gold and real estate to mundane items such as food, drinks and video games.
Because Bitcoin, Ethereum, Stellar, Polkadot and other cryptocurrencies only exist online and afford users a wall of digital encryption and anonymity, they are sometimes used by criminals to hide illegal enterprises such as money laundering, drug distribution, weapons trafficking and more.
It should be noted that hiding assets in a Massachusetts divorce is also illegal.
Crypto in divorce
Regardless, family law attorneys report that crypto is increasingly an issue in property division in divorce.
“The hardest part for attorneys is first to determine whether there was an investment (in crypto),” says Sandra Radna, a Long Island family law attorney. “And then, once you have that suspicion, to go after it.”
While some spouses know from conversations that their soon-to-be-ex have purchased crypto, others suspect that their spouse has enjoyed the rapid gains in crypto value because of recent splurging on expensive items, such as a new car.
Tracking it down
While crypto can be hard to track, forensic experts can analyze stored electronic data for digital currency ticket symbols, login credentials or contacts with companies dealing in crypto.
They can also track emails from cryptocurrency exchanges and transfer activity on credit card and bank statements.
Radna said some spouses have also filed tax returns reporting crypto income, while others have listed the currency as an asset on loan applications.
CNBC reports that while forensic experts have ways to follow crypto trails, those experts can be expensive.
Said Radna, “We’re looking for people that have made significant amounts of money for it to be worth the investigation.”
One way that those who expect a divorce in the future can avoid a pricey forensic investigation is to familiarize themselves with household income and expenses, savings, checking accounts, credit cards, 401(k) plans, stocks and other elements of marital assets.
In that way you can notice unusual spending or income and any other uncommon movement of funds or assets. You’ll also be better equipped to help your family law attorney protect your rights and interests in divorce.