When one spouse cannot access assets during a divorce, it may lead to significant disputes. Offshore bank accounts are increasingly common these days, especially among individuals with especially high net worths. If one spouse is aware that assets are being concealed or “protected” in an offshore account, it may lead to significant disputes during the divorce. Concealing assets is obviously illegal during a divorce, but how easy is it to actually prove that an offshore account even exists? The whole point of these accounts is to conceal assets from the prying eyes of many, including tax collectors and unhappy former spouses.
Tracking Down the Offshore Account
One of the best ways to track down an offshore account is to simply review the family’s tax return. After 2009, the IRS cracked down on the widespread use of offshore accounts. Today, offshore banks are required to report their customer’s investments. While a spouse may use a number of strategies to get around this obstacle, these accounts are now easier to find than ever before. At the height of this initiative by the IRS, UBS revealed the names of 4,000 offshore investors in order to avoid criminal charges.
Forensic Accounting
Whenever concealed assets are a possibility during a divorce, hiring a forensic accountant is usually a solid move. Spouses can rely on these financial experts to track down the source of a wide range of assets. This might be a particularly smart idea if spouses merely suspect that their ex has an offshore account without any real evidence. A forensic accountant can search for small clues that might point to the existence of an offshore account.
Banking Laws May Vary
In practice, offshore banks have no obligation to adhere to US law. Indeed, this is one of the main reasons they are so popular among wealthy investors. While the US might have specific regulations about information a bank must disclose during a divorce, an offshore account could potentially disregard these laws. If a spouse is intelligent enough to choose an offshore bank account that specifically helps them protect and conceal funds from their ex, then it may be incredibly difficult to expose these assets during a divorce.
The Consequences of Concealing Assets
While the potential rewards for concealing assets may be substantial, the risks are tremendous. If these offshore accounts are discovered and the spouse made no effort to disclose their existence, that spouse could face serious legal and financial consequences. First of all, they would be violating their fiduciary duty to their spouse. Secondly, they may be charged with perjury after lying under oath during the divorce proceedings. These offenses may result in fines or even jail time.
Perhaps more importantly, concealing assets can have a huge impact on the divorce proceedings. Spouses who are caught concealing assets may be ordered to pay their spouse’s legal fees. In addition, the guilty spouse essentially loses all credibility in the eyes of the court. This means that almost every decision will go against their way, including matters related to equitable distribution, alimony, child support, and child custody.
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