Five Ways New Yorkers Hide Money in High-Net-Worth Divorces

New York is the world’s financial center, home to big banks, insurance companies, private equity firms, and more. The state is also the home of some of the planet’s wealthiest individuals. Being wealthier does not necessarily increase the likelihood of divorce but it can increase the ways a spouse can conceal money and other assets.

If you are thinking about divorce, obtain an attorney skilled in uncovering cash, property, stocks, and other assets you may not know about. Contact our sharp legal team at Samuelson Hause & Samuelson, LLP at (516) 584-4685.

Here are five ways that a high-net-worth spouse obscures assets from the other. It is not illegal to have these accounts or use the following strategies; however, it is unlawful to not disclose these assets in a divorce.

Offshore Bank Accounts

Shifting money into an offshore account is one strategy some spouses use to hide money. Strict privacy protections make Switzerland a longstanding favorite country to stash cash. Other popular locations include Caribbean countries like Belize and the Cayman Islands and farther-flung nations such as Singapore. These accounts are relatively easy to open and may offer debit cards just like U.S. banks allowing for cash withdrawals without a wire transfer.

Cryptocurrency

A more recent avenue to hide money is cryptocurrency. Some digital assets are anonymous, which makes them very challenging to track. Bitcoin, Ethereum, Zcash, Litecoin, and Chainlink are a few examples of cryptocurrencies. A cryptocurrency is a digital asset that exists outside the control of governments and central authorities. The cryptocurrency does not reside in a bank, rather a ledger system on a computer network that is secured through encryption technology.

Offshore Domestic Asset Protection Trusts

Your divorcing spouse may be hiding assets at an offshore trust. Trusts, not the person, technically own the assets placed in them. A spouse can Your divorcing spouse may stealthily transfer marital assets to the offshore trust. The divorcing spouse could also make new purchases through the offshore trust. Real estate, cars, jewelry, boats, and other goods can be bought in the name of the trust. Doing so keeps the spouse’s name off any title. A Cook Islands trust is especially popular because it allows the person establishing the trust to also be the beneficiary while the assets are protected from creditors and others.

Domestic Asset Protection Trusts

A spouse doesn’t have to ship off money to a foreign land in an effort to protect those dollars in a divorce. Many wealthy are using a location here in the U.S. – South Dakota – to shield part of their fortune. Trusts in most states can only exist for a certain amount of time before the assets must be liquified. South Dakota trusts have no expiration so assets can continue to be protected and accumulate value indefinitely. Another plus is that South Dakota has no state inheritance tax, capital gains tax, or income tax. The Mount Rushmore State also has substantial privacy and asset protection laws.

Shell Companies

A shell company is a business without operations or sizable assets of its own. There are legitimate reasons for setting up such an enterprise. Establishing a business to hide money is not one of those valid reasons. Who owns the corporation can be difficult to determine.

Who Is Considered High Net Worth?

There are generally accepted definitions of what is considered high net worth.

The categories of high-net-worth are defined as follows:

  • High Net Worth: Net worth between $1 million and $5 million
  • Very High Net Worth: Net worth between $5 million and $30 million
  • Ultra-High Net Worth: Net worth greater than $30 million

Investors with less than $1 million but more than $100,000 in liquid assets are considered sub-HNWIs but still fall into the top 5% of wealth among the U.S. population.

New York is No. 1 globally in the number of people worth $30 million or more. Long Island counties of Nassau and Suffolk ranked only behind Manhattan and Westchester County for the most millionaires in the state.

Other Tactics to Hide Money

The wealthy aren’t the only ones taking steps to keep money out of the hands of their soon-to-be exes.

Ways big and small that a spouse can siphon money in preparation of divorce include the following:

  • Overpay Taxes
  • Underreport the Value of Property
  • Get Cash Back Using a Debit Card
  • Stash Prepaid or Gift Cards
  • Open a Safe Deposit Box
  • Open Custodial Accounts for Children

Finding Hidden Assets

If you suspect your spouse is hiding money, you can conduct a preliminary investigation. These steps are more easily accomplished prior to filing for divorce and while you still share a home.

  • Look for cryptocurrency exchange apps on your shared cell phone plan.
  • Observe any new patterns of bank withdrawals.
  • Watch for unusual gifts to friends or family.
  • Notice if they become more secretive in sharing bank, retirement, and other statements.
  • Detect large online purchases with nothing to show for them.

Fortunately, you do not have to probe your spouse’s financial dealings on your own. Our attorneys at Samuelson Hause & Samuelson, LLP work with skilled forensic accounts to uncover hidden assets. They examine bank records, tax returns, loan documents, court filings, insurance policies, and more to expose assets that are not being properly disclosed.

An accurate accounting of assets is critical because spousal support, child custody, child support, and property division are affected. Criminal and civil penalties can be imposed.

Quality Representation for a Fair Divorce Settlement

Spouses in high-net-worth divorces often have millions of dollars at stake in their divorce settlement. Convoluted schemes and business arrangements are methods used to obfuscate one’s true worth. Having an attorney with specific knowledge in complex asset cases is critical. Our attorneys have more than 100 years of combined experience in high-net-worth New York divorces.

Learn more about how we can protect your rights. Schedule an initial consultation by calling (516) 584-4685 or contact us online.

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