Monday, December 27, 2010

Becoming Your Own Financial Detective

In a divorce proceeding, if you are not completely familiar with your marital estate, you must obtain a comprehensive financial picture of both you and your spouse, individually and together, in order to achieve a fair resolution. After all, you need to understand what is available to divide in order to calculate your fair share.  However, when your adversary proves to be less than forthcoming, developing a picture of the assets and debts of the estate can be challenging.

Obviously, you can engage an expert such as a private investigator, forensic accountant or asset search service, in addition to your attorney. However, retaining outside help can be expensive and you may save yourself both time and frustration by first performing some of the basic work on your own. That way, you may find what you need without outside help. If you do need an investigator you will have to be able to point the professional that you retain in the correct direction.

Establishing an outline of your marital estate means gathering information. Some assets are easier than others when it comes to establishing their value. For example, a retirement account, bank account, stock or investment account should have documentation in the form of statements and summaries. Usually, the value is printed directly on the statement. A retirement account holding $100,000 is obviously worth $100,000 (of course minus any tax effect or other arguments regarding actual value).

However, some assets are not that easy to trace or value. These less trackable items tend to be physical objects, such as jewelry, cash, collectibles, art work, precious metals or automobiles. If your spouse owns a physical object that could be valuable, such as a collection of musical instruments, there is typically no statement sent every month similar to what your bank sends out to apprise you of what is in your account. However, you can utilize tools available to the general public to attempt to track down these items.



When attempting to find or trace assets, the first thing that you must remember is that an asset, like you or me, is an actual tangible item that has a life span. The asset must be created at some point and then obtained by someone whether by purchase, gift, inheritance or otherwise. Once someone has an asset in their possession, the person may take any of the following actions: insure,  maintain, appraise, repair, store or transport it. Often, an asset will be taxed in some way. Depending on the type of asset, many people like to discuss their possessions so it will be rare that someone will be silent about an asset, especially something unique or precious like an expensive car, valuable jewelry or exotic art work. At some point, people may dispose of an asset by donating it to charity, gifting it to someone or selling it and, at this stage in the life of an asset, there is usually some type of advertisement or publicity about it. Accordingly, when attempting to trace assets in your own marital estate that you suspect that your spouse may be hiding or otherwise keeping from you, remember the various stages in the life of an asset and this will assist you in tracing it.




Once you understand the potential life span of an asset, think logically how to investigate each phase.  Here are some examples and tips for each stage of an asset’s life:

1. Obtain: Purchases may have a receipt or a charge on a credit card bill.  A gift, if it is expensive, may have resulted in a gift tax returns.  Additionally, the occasion may have been marked by photographs.  An inheritance is designated in a will – which is filed as a public record.

2. Maintain and Store: Look for evidence of storage facilities or safety deposit boxes, as well as receipts for work such as cleaning or refinishing (depending on the type of assets).

3. Appraisals: These are often obtained for the purpose of insurance policies so look for insurance riders.

4. Repair: Look for bills or invoices.

5. Tax: Review tax returns for capital gains or losses with regard to disposition of assets and even evidence that an asset has been stolen - there will generally be a casualty loss deducted on the return.

6. Disposition: If the asset was donated - people will generally deduct the value on Schedule A of their tax return.  A Sale may have been advertized or otherwise publicized and may result in a capital gain or loss.



As with all aspects of a divorce, you must perform a cost-benefit analysis on your investigation.  Make sure you are not spending more time and energy to find an asset and prove its existence than the asset is actually worth.

1 comment:

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