Money manipulation is a common fear among divorcing couples. When high value movable assets are involved, divorcing spouses are tempted to distort financial facts to take advantage of, or perhaps punish, the other partner. Feelings of anger, resentment, fear and betrayal can affect each partner’s thoughts regarding identification, valuation, and division of jointly acquired marital assets and debts. In a phrase, divorce brings out the worst in many people.

In an ideal world, a divorcing couple would be completely open and honest with one another when disclosing marital assets and debts to each other and their respective legal counsel. Reported data, however, show that 97% of divorcing couples fudge on their finances. The two main areas of manipulation are:

• Underreporting of income
• Hiding assets

Some people convince their friends and family members to assist them in hiding their assets or changing title to assets or creating “loans” or “liens” on marital assets. This can be an easy sell when one spouse is perceived to have harmed, abandoned, or in some way “wronged” the other. With the cooperation of a friend or relative, a person can dump assets into the name of another so as not to include it in the marital basket.

Such misconduct is always a mistake for the defrauding partner and his or her allies. Once discovered by the other party, the consequences for the perpetrator and his or her allies can be severe, including mandated restitution of the assets plus counsel fees and costs of recovery. New Jersey has a stiff statute prohibiting fraudulent transfers of assets.

Likewise, many spouses under report their income as a way of lowering or avoiding alimony and/or child support. Some people attempt to shift their income downward by changing their compensation plans to less income and more stock options or other alternative compensation methods. Others delay raises and defer bonuses, with the assistance of their companies, which is easy to do if the actor is an owner or manager of a closely held company. Yet others find ways to leave their jobs or lose their jobs, which is an extreme version of manipulating income, but it does happen.

The antidote to this income reducing behavior is to involve a forensic CPA or financial planner, along with an employment expert, to look carefully into the details of the changed financial stream. A bad faith maneuver, once disclosed to the court, will be unfavorably reviewed by the trial court, and could result in sanctions, including a counsel fee award and costs in the other party’s favor.

The legal standard is the other party’s mere unreasonableness, not bad faith or fraud.

The above described spousal partner practices are improper, because they subvert the marital enterprise that is under review by the dissolution court. Nevertheless, for their own reasons, some people try them anyway.

If their lawyers know this is happening, or find it out from the other side, then the lawyers must insist that the defalcating clients desist and correct what they have done. If the party so instructed does not cooperate, then their lawyer must cease the representation, without telling the other side why. Of course, the other side either knows why or reasonably suspects.

In sum, if you have reason to believe your spouse is either hiding assets or under-reporting income, your attorney should immediately have you engage a forensic financial investigator to take a deep dive into all the finances. In addition, your attorney can subpoena tax returns and other financial documents as part of the financial discovery process. If the other party is reluctant or unwilling to produce financial documents, or unreasonably delays production, or makes delivery promises and then breaks them, all of these indicate they are not being transparent. Under any of these circumstances, the trial court will almost certainly compel the production of documents.

If the parties are already in mediation when these failures to deliver occur, then the mediator and each party’s legal counsel will likely push for production, failing which a trip to the courthouse becomes inevitable. While time consuming and expensive, motion practice in these circumstances may produce startling results that, in turn, may expedite final settlement and resolution.

Over the years, this office has had successful results in a variety of client cases involving under-reported income and hidden assets. We understand the seriousness of the problem and we know what needs to be done to remedy it.

The most important step you can take to stop a vindictive spouse from manipulating or hiding financial information is to hire a family law specialist attorney to represent you. The attorneys at Hanan M. Isaacs, P. C., are available when you need us. We are compassionate counsel and tough advocates. Call 609-683-7400 or contact us online to schedule a near-term reduced fee initial consult at our Central Jersey offices in Kingston. We will listen to your facts, advise you as to the law, and recommend the best path for you. Call us today. You will be glad you did.