Forget about squirreling away lockboxes full of cash or giving faux loans to relatives to try to hide their assets – savvy spouses intent on hiding their wealth during their divorces are frequently using trusts.
We’re not necessarily talking about offshore trusts, either. In fact, some states have become known as a haven for trust by the wealthy who want to put money and property out of reach of creditors, governments and (of course) their divorcing spouses.
How could your spouse fund a trust when you don’t know it?
It’s not particularly hard – and there are trust companies that openly assist people as they go about “asset protection.” Realistically, your spouse only has to follow their directions to get a trust (one that’s designed solely for their benefit) up and running.
Then, they can transfer marital assets into the trust by:
- Giving ownership of expensive items (jewelry, vintage cars, collections and art) to the trust
- Taking money from the marital accounts and purchasing property in the trust’s name
Generally speaking, doing things like that is considered a fraudulent transfer, but the trusts may be hard to track since they are unlikely to be in your spouse’s name. It can also be exceedingly difficult to claw back property that’s made its way into a trust without significant legal effort.
That’s why it pays to be proactive. If you believe that you cannot trust your spouse to play fair when it comes to the marital estate, you need to take immediate action. Part of that may be keeping a close eye on the household finances, and part of that may be asking the judge for an injunction that will stop your spouse from depleting any marital assets until your divorce is settled.
Whatever your exact situation, if you’re divorcing a spouse who doesn’t seem willing to do what’s right, make sure you have experienced legal guidance.