Hiding Money

I haven't crunched any real numbers but I would say anywhere from 20-40% of my clients mention in the initial consultation, the fear that their spouse is hiding money. Unless their spouse is a small business owner, particularly one dealing with a lot of cash, I tell them that hiding money is actually harder than they probably think.  

For one, the IRS is in the business of finding money.  Most financial accounts generate at least a modest amount of reportable interest or dividends.  More than $10/yr will trigger a 1099 to the IRS, meaning that even if a spouse doesn't report the income, the IRS will soon catch up to him/her and when that happens, the divorce attorney will catch up too.

I've heard a lot of stories over the years about how parties going through a divorce hide money.  Cash withdrawals, buying gift cards, lines of credit, fishy "loans" to family members... to name just a few.  In discovery we ask for statements for checking, savings, bonds, retirement, certificated stock, etc., including all the usual ways and places people invest their money.  Some of the weirder cases I have had involved various valuable collectibles such as baseball cards, antiques and the like, which are hard to value and can actually be physically hidden.

But now, there's a new breed of "hidden money" in our midst.  Virtual currency.  What's that?  You've never heard of that? My friend Andrew Hinkes  is an authority on the subject and has made me aware of the complications related to virtual currency (i.e., bitcoin, lite coin, doge coin).  Here's a taste of the level of complication you didn't even know existed:

http://www.insidecounsel.com/2014/07/29/blockchains-smart-contracts-and-the-death-of-speci

Confused?  At least now you know what you don't know, which is a start. Virtual currency is becoming more relevant and prolific by the day. Attorneys and clients need to be knowledgable and aware to avoid any pitfalls. If you're an attorney, educate yourself before its too late.