Home Financial Issues Hidden Assets and Financial Discovery

Montgomery County Divorce Lawyers Discover Hidden Assets

Hidden Assets and Financial Discovery

All of Pennsylvania's 67 counties have what are referred to as Domestic Relations or Family Law Courts that are assigned cases such as divorce. Throughout the Commonwealth, there is an underlying commitment to the protection of the family unit. In situations of separation and divorce, the courts strive to implement economic justice among parties and insure that marital assets, property, and such are distributed in an equitable manner. The first step is to identify all marital assets, which for example are: accounts, account balances, investments, trusts, dividends, CD's etc.

Financial Discovery and Enforcement in Pennsylvania

The Pennsylvania Rules for Discovery in Domestic Relations Matters allow for discovery in cases, which is the process of identifying, qualifying, and determining the value of all marital assets that are then subject to equitable distribution among the parties. The court has the power to investigate and enforce non-compliance among parties (such as non-disclosure of assets) throughout the discovery process. Some of the measures that the court will take in response to non-compliant parties in the process include:

Entering a judgment
Authorize seizure of property, regardless of whether it is tangible or intangible
Assess interest penalties
By ordering a sale of property as needed
By ordering surety, such as deposits to encourage future compliance
Hold a non-compliant party in contempt of court
The assessment of fees and costs for counsel
Implementing a wage garnishment

If the court deems that it is the intention of a party to remove or dispose of assets in efforts to circumvent the process of equitable distribution, they may file an injunction preventing such action. If hidden (undisclosed) assets are discovered, the court may establish a constructive trust for the compensation of the wronged party. Another tactic that a non-compliant party may employ is to transfer or sell off marital assets, often at below market value, in efforts to avoid subjection to equitable distribution.

Other Common Places to Uncover Assets

Subchapter S Corporations, which can "pass-through" company earnings by diverting funds to the shareholders.
Entities that do a considerable volume of cash-based business.
Executive-level deferred compensation arrangements and stock allocations.
Accounts that are maintained in off-shore (non-US based) financial institutions. Often initially established and used by those seeking to avoid domestic income taxation, and conveniently in an instance of divorce, may also be undetected.

What Is Cryptocurrency?

A cryptocurrency is like a digital token that you can buy with real money. Cryptocurrencies are often exchanged for goods and services, making these transactions extremely difficult to trace. There are no banks, governments, or central governing authorities that regulate crypto currencies. Instead, all cryptocurrency transactions are maintained on blockchain, which is a digital ledger of transactions that cannot be manipulated or destroyed.

The blockchain records of cryptocurrency transactions are automatically distributed across a network of computer systems. A cryptocurrency account can only be accessed by someone who has the correct password. Without a password, cryptocurrencies have no value. In fact, people have lost millions of dollars in assets simply because they lost their password.

The use of cryptocurrencies such as Bitcoin has increased dramatically in recent years. According to Nerdwallet, there are now more than 67,000 different types of cryptocurrencies traded with an overall value of more than $2.2 trillion dollars. These assets are highly volatile, fluctuating up and down in value, and they are very east to hide.

Locating Hidden Cryptocurrency Assets

Cryptocurrency is designed to be kept secret from governments and other authorities, so they can be very hard to detect unless you know what type of cryptocurrency you are looking for and you have the owner’s password. Fortunately, your divorce attorney can work with a forensic accountant to locate these hidden assets during the discovery part of asset division. Clues that your spouse may be using cryptocurrency to hide assets include:

Large online purchases with no credit card or bank records
A cryptocurrency exchange app on their phone
Email receipts of cryptocurrency activity
Secretive activity with bank statements
Patterns of small bank withdrawals
Written passwords

Even if a computer’s hard drive has been wiped clean, it still may be possible to recover records of past transactions.

Social Media and Electronic Discovery

The prevalence of social media in US culture is continuing to increase. In 2015, the Pew Research Center completed a study which indicated that approximately 65% of the US population is engaging in some regular usage of social media platforms, such as Facebook, LinkedIn etc. Usage data indicated that approximately 68% of females and roughly 62% of males were active users. Social media is likely to be increasingly used in civil court-related activity based on its inherent qualities and nature such as:

The courts become more comfortable in considering it as applicable for discovery as electronically stored information when admitted in the proper manner.
A great deal of social media activity is used for delivering and sharing public information; therefore, it is unlikely that admitting such information would be considered to violate privacy restrictions.
Most social media leaves a lasting "footprint", is likely to contain photographs, and the information posted is likely to reveal the time it was originated.

Electronic discovery (or "e-discovery") will continue to be used increasingly in cases as our society continues the transition to communication exclusively conducted via electronic means.

Contact Our Montgomery County Divorce Attorney Today

The process of a divorce can be a stressful situation for you and your family, and the details can become complex for those unfamiliar with the many aspects involved. Sheryl R. Rentz has been a specialist in Pennsylvania family law for over 25 years representing clients in Chester, Delaware and Montgomery Counties. To coordinate a free consultation, contact the Law Offices of Sheryl R. Rentz, P.C at (866) 290-9292.

Additional Information

We know your problems are unique & special.
Call us, we will listen.
866.290.9292

Meet Attorney
Sheryl Rentz