How to discover hidden money during divorce

You might not think this could happen to you, but often in life people find themselves in a situation where they need a deep analysis of where their money is, and how it’s being spent. For 25 years, Stacy Preston Collins has been performing this task as a forensic accountant. She’s a CPA, but she doesn’t file tax returns.

Instead, you might hire her to chase down a money trail in a divorce proceeding or a complex case involving business fraud. Stacy’s precise job in a case is to locate assets, determine their exact value, and track down spending or hidden bank accounts.

She says that occasionally “people don't want to provide a little or a lot of what we need. And then we have to try to deal with that,” by first asking nicely for the information, but then using other tactics, like tracking down account information by court subpoena.

“Investigative accounting” is a good way to look at it, because as Collins says, it often involves chasing a paper trail. Collins deals primarily with contentious matrimonial disputes, which she says can be emotional.

“They may realize that their spouse has tried to hide some of the assets,” she says. “There’s a joke in the matrimonial world that people can get an illness known as R.A.I.D.S. or Recently Acquired Income Deficiency Syndrome.” Hiding money, in the end, doesn’t really work to a spouse’s advantage. Chances are, it will be found.

A good starting point if you’re entering divorce is to know where your assets are located.

Collins says that it can be very hard deciphering financials and assets within a marriage if one spouse is in the dark. “The starting point is getting copies of your personal tax returns,” she says. And if you file jointly, you don’t need the other spouse signing off. This can be done by requesting a free tax transcript through the IRS’s website.

Collins says when people start fighting over money, crazy things can happen. She has seen people spending excessively on their business credit cards for things unrelated to their business – “it's because someone's having an affair, spending on a girlfriend or a boyfriend,” says Collins.

She says it’s not a good idea to get someone's passwords without their knowledge or consent. A family computer that everyone has access to, for example, is different from a phone or a laptop that only one party has access to, and a lawyer or court will always want to know how information was discovered. “If it was obtained in an inappropriate way,” she says, “it might not be able to be used [in court].”

Hiring a forensic accountant can get expensive, so Collins advises that potential clients decide what questions they have, and how far they want to pursue answers. They must also recognize they might not find everything they’re looking for. “Do the records always get found? I'm sure the answer’s no to that,” Collins says. But overall, forensic accountants are really trying to help people figure things out and get on with their lives.


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