EP 53: Is Your Spouse Hiding Money From You Outside the United States?

Episode fifty-three of the Divorce and Your Money Show discusses a way a spouse can hide assets during a divorce.

A unique way of hiding money is through offshore assets (i.e., hiding money or assets in a country other than the United States). Recently leaked Panama papers showed that companies and individuals around the world hide assets via this method, which sounds like something out of a spy thriller.

Surprisingly, it was found that a large number of divorcing spouses were trying to hide assets outside of the US. Methods that they used to make those accounts untouchable were also revealed.

An offshore account refers to assets or accounts that are based outside the US. It could be in Canada, Mexico, or any other country in the world. There are many countries with strict bank-secrecy laws, which encourage hiding assets there. By hiding these assets, people also owe less in taxes.

An asset-protection trust is a legal tool that can be used for making offshore accounts. Oftentimes, it’s easier to set up accounts in other countries than in the US. It doesn’t have to be a bank account; it could be a safe deposit box that jewelry or artwork disappears into. They could also have warehouses in countries like Switzerland, where valuable assets could be stashed away.

This trick is very easy to achieve, and it’s not just for millionaires and billionaires. Here is a list of countries, where your spouse may have opened an offshore account:

  • Cayman Islands
  • Isle of Man
  • Jersey
  • Ireland
  • Mauritius
  • Bermuda
  • Monaco
  • The British Virgin Islands
  • Switzerland
  • Panama
  • Bahamas
  • Hong Kong

A reason for suspecting this activity would be a letter or a statement from one of these countries. Or if your spouse frequently visits that country, he or she could have accounts set up there with assets that you’re entitled to during your divorce.

The reason for setting up accounts there is simply because the assets are hard to track down—oftentimes for both you and the government. The assets are hard to get back, even if you know about them. Some countries don’t have friendly laws regarding such situations.

But thanks to technology, no one may be able to hide anything anymore. One easy tactic is checking out your tax returns. You’re looking for a Schedule B, Form 8938, or statement of foreign financial assets. If you have any foreign assets, the IRS legally requires you to list them.

If the assets are not listed on the tax returns, then you should seek an attorney with expertise in global-asset searches. You can go online and search for an attorney in the specific country you suspect they’re in. The attorney will have specific tools and tricks for finding any hidden assets.

Another way of solving this problem is by hiring a forensic accountant. If you hire someone with expertise in global-asset searches, you can track down those assets. If you have a suspicion, it might be worth exploring this angle. Then you’ll get all the money you deserve during your divorce.

Key Learning Points

  • Offshore assets involve hiding money or assets in a country other than United States.
  • There are many countries with strict bank-secrecy laws, which encourage hiding assets there.
  • Oftentimes, it’s easier to set up accounts in other countries than it is in the US.
  • These assets could also be in a safe deposit box or warehouse.
  • If you receive a letter or statement from one of these countries (or your spouse frequently visits that country), the chances of offshore accounts there increase.
  • Check out your tax returns. You’re looking for a Schedule B, Form 8938, or a statement of foreign financial assets.
  • You could seek an attorney from that country with expertise in global-asset searches.
  • Forensic accountants with expertise in global assets can also track down those assets.

Conclusion

Thank you for listening to the Divorce and Your Money Show. We hope this podcast helps you through one of the most difficult periods of your life. Shawn Leamon is also author of Divorce and Your Money: The No-Nonsense Guide. One-on-one divorce coaching services are available at www.divorceandyourmoney.com.

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Shawn Leamon, MBA, CDFA

Dallas, Texas

Shawn C. H. Leamon is Managing Partner of LaGrande Global, a firm that helps successful families manage large financial transitions like divorce, inheritance and selling a business.

He earned his Bachelor of Arts from Dartmouth College, double majoring in Economics and Philosophy, and his Masters in Business Administration at Spain’s IE Business School.

Before founding LaGrande Global, Shawn helped manage $1.1 billion in client assets at Bernstein Global Wealth Management. He also worked as a credit research analyst at J.P. Morgan. He is a Certified Divorce Financial Analyst, and he has been an advisor to numerous high-stakes divorce cases.

Shawn is the author of two well-received finance books: Managing Private Wealth: Principles, and Divorce and Your Money: The No-Nonsense Guide, both published in 2016.

In his spare time, Shawn is an ultra-endurance athlete and has competed in events as long as 24 hours. He is an Eagle Scout and a member of the Alumni Board of Greenhill School.