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03/23/2018 11:06 EDT | Updated 03/23/2018 11:08 EDT

How To Catch A Financially Unfaithful Spouse During A Divorce

Some individuals believe that they can keep their money by making some of it "disappear," or claiming they have or earn less than they really do.

There is such a thing as an uncomplicated divorce. But cases can get messy when one party decides to lie about or hide some of their assets.

Unfortunately, this happens more often than people think. Money can bring out the worst in people, especially if their relationship ended on bad terms, but hurt feelings do not justify a party's decision to try and pay their ex less than they are entitled to receive.

Individuals who stash money offshore, who keep Bitcoin a secret or who transfer funds to a friend for safe keeping are often confident that the risks are worth the benefits.

When going through a separation, each party is obligated to provide full financial disclosure to the other. This is required for the purposes of calculating spousal and child support, and property issues. The reality is that most people will fully participate in this process, but some individuals believe that they can keep their money by making some of it "disappear," or claiming they have or earn less than they really do.

This is risky behaviour. The Ontario Family Law Act expressly sets out that a court can set aside any contract or settlement if it was reached without full disclosure by one or both parties. Furthermore, a court may enforce sanctions, or a cost order against a party, if it is found that they were being dishonest about their financial situation. But the individuals who stash money offshore, who keep Bitcoin a secret or who transfer funds to a friend for safe keeping are often confident that the risks are worth the benefits. Many believe that no one will have a way of finding or proving that they have those assets. But those individuals are wrong — and they usually get caught.

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Spouses are often the first to know that something's not right

There are a lot of red flags that give financially unfaithful spouses away. It's usually their partner who is the first to detect something is off. At Shulman Law Firm, we've seen instances where an opposing party has claimed to make just enough money to get by. In reality, they were making much more, but were hiding additional cash offshore, or in a small business.

The spouse sees that the opposing party is still living comfortably (renting an expensive condo, going on vacation etc.) which means there was more money coming from somewhere. In some instances, our clients were able to obtain a statement from a hidden bank account, and this gave us the proof we needed to request accurate financial from the opposing party.

Sometimes, a party learns that their ex has a substance abuse or gambling addiction, or has been using money to support a new partner.

Other times, if physical evidence cannot be acquired, we will examine bank statements to find inconstancies. If there is a regular monthly withdrawal, or one large transfer that hasn't been properly accounted for, we will follow up with the opposing party and try to figure out where this money is going. If we cannot get a conclusive answer, we will request the assistance of the court.

Sometimes, a party learns that their ex has a substance abuse or gambling addiction, or has been using money to support a new partner. In this case, a court may order unequal division of property. Other times, their suspicions about hidden assets prove to be correct.

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There are professionals who specialize in finding hidden assets

If a family lawyer is unable to get a conclusive answer about the opposing party's finances, a forensic accountant or private investigator may be asked to assist. These professionals are extremely helpful in cases where there is no paper trail. Bitcoin, for example, can be very hard to trace. One of the major attractions of this digital currency (other than its value) is that it offers a great deal of anonymity. It is entirely possible that one party could have purchased Bitcoin without the other party's knowledge for an insignificant amount of money years ago, and is now waiting to cash in on the increased value of the currency. More likely though, a spouse knows their ex has Bitcoin, but has no clue how to prove it.

Family lawyers in the U.K. have already witnessed how tedious Bitcoin disputes can be, and additional complications may arise because the value of the currency fluctuates so rapidly. Though no cases involving cryptocurrency have been documented in Ontario yet, it's only a matter of time before one arises. Forensic accountants and private investigators are aware of the problems this new currency can cause, and are prepared to handle these cases.

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Don't spend $10,000 to prove your ex is hiding $1,000

It will cost a party additional time and money to prove their ex is hiding assets, but in many cases, the costs will be worth it. However, parties should not allow their feelings to dictate their actions. Going after an ex for a few hundred dollars will not benefit either of you in the long run.

If in doubt, always consult with your family lawyer. And on that note, do not attempt to conduct a full financial investigation on your ex by yourself. It's always a wise idea to hire a family lawyer when getting separated or divorced because they will ensure that your legal rights are properly protected. But when dealing with something as complex as hidden assets, someone could end up losing thousands of dollars without appropriate legal assistance.

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