Hidden Assets in Divorce Panama Papers

Clients of Wellspring Divorce Advisors regularly express concerns about hidden assets in divorce proceedings. Often trust has been lost thanks to an affair and it is easy to take the next step and believe one lie makes it likely there are others. In most cases a Certified Divorce Financial Analyst at Wellspring can either confirm or deny these client fears through forensic review of financial records but the realizations found in the Panama Papers have proven it may be possible to hide assets. At least for a while.

The Panama Papers, published the International Consortium of Investigative Journalists or ICIJ, reveal

  • Offshore companies used ‘in a game of hide and concealment’ after marriages break down
  • Documents list luxury cars and yachts, lavish homes, and art collections
  • Spouses face a costly battle to prove ownership of offshore assets in protracted divorce proceedings

The ICIJ published a story How the One Percenters Divorce: Offshore Intrigue Plays Hide and Seek with Millions” in early April of 2016. Most of the names revealed in the papers are international but the South American location of the law form involved does not render American citizens immune to the frauds perpetrated.

Concerns for hidden assets in divorce are common and widespread. If you share these concerns you must ask yourself; How much is the peace of mind worth? The peace of mind to know your spouse did not defraud you in the divorce proceedings. The peace of mind to know you got what you were owed in the financial settlement. There are ways to uncover hidden assets in divorce if you have the time and money to pursue it. We suggest you work with your Wellspring Divorce advisor and your attorney to look at the cost versus benefit of doing so and make your decision on how to proceed with the professional advice in mind.

Financial Crisis Still Causing Complications in Finances of Divorce

Four years later we are still encountering financial complications of our 2008-2009 financial crisis in divorce proceedings. Many bank and brokerage companies were forced to merge during the crisis. Morgan Stanley merged with Smith Barney. Bank of America merged with Merrill Lynch. Wells Fargo took over Wachovia and Lehman Brothers went out of business.  On top of the logistical problems; many people lost a lot of money. Here are three complications to watch out for.

1. During mergers many firms changed client account numbers. I have seen more than one occasion where a Marital Settlement Agreement was written with two different account numbers for the same account. Even worse, the two different account numbers might be treated differently. One awarded as separate property and the other to be divided.

2. During the crisis itself many investors lost large sums of money in their investment accounts. The S&P 500 lost 56% during the crisis and I have seen some situations where clients lost money then sold the assets locking in the losses. Now the spouse with no involvement in the investment management is wondering where all the money went. They may even be considering the possibility that they spouse responsible for managing the investments could have taken the funds and hidden them elsewhere in preparation for the divorce.

3. Some brokerage companies and banks did go out of business. It makes it difficult to track down account statements and verify funds when the custodian of the account no longer exists or has been consumed by another institution.

I suspect the effects of the Financial Crisis will continue to complicate the financial negotiations of divorces for a few more years maybe longer in situations where separate property claims must be traced back to 2008 and earlier.

We can help you and your attorney piece together the information that is available and make intelligent decisions about building your financial case.



What are the Benefits of Divorce Financial Planning?

We will produce powerful case exhibits for you and your attorney in the form of spreadsheets, graphs and tables that simply and completely convey results of our analysis and help you and your attorney:

    • Find hidden and obscure assets and avoid missing something in the settlement
    • Determine income available for Child and Spousal support calculations.
    • Contemplate the risk/reward relationship of various negotiation strategies you may consider pursuing with your attorney