Most California couples who are going through a divorce do not need to worry about financial fraud, but it does occur in some instances. Individuals may attempt to hide assets so that they do not have to split them with their spouse. Some red flags that may indicate fraud include spouses who have mail delivered to another address, hiding details of financial transactions and sudden changes in behavior.
It may sometimes take forensic accountants to uncover fraud, and in situations with more complex financial arrangements, the fraud may be more difficult to detect. From hidden brokerage accounts to shell corporations and unfunded trusts to safe deposit boxes no one knows about, the methods of hiding assets are extensive. In some cases, individuals may involve gullible loved ones by claiming their spouse is cleaning out the bank account.
In addition to hiding assets, estranged spouses might commit financial fraud through a process called dissipation. This occurs when a person deliberately spends, abandons or destroys assets. Dissipation may also include money spent on extramarital relationships or destruction of personal items. It might simply be excessive spending.One of the elements of fraud is fraudulent intent. This, however, can be the most difficult aspect to prove.
An individual who is considering divorce may want to begin by trying to get a good handle on the couple’s finances. Sometimes, it may be helpful to review income, debt and assets and sit down with an attorney before moving forward. People who do suspect that their spouse is trying to conceal assets may want to discuss how to proceed with the attorney. In most cases, spouses are not deliberately trying to defraud one another, but there may still be conflict over what constitutes marital assets and how they should be split even in a community property state like California.