Title: Difficulty of Discovering Financial Backgrounds in Divorce
A study released by the University of Maryland last month shows that America’s notoriously high divorce rate is actually on the decline. Between 2008 and 2018 the divorce rate dropped 18 percent. Phillip Cohen, who conducted the study, believes millennials are responsible for the lower divorce rate.
Cohen believes that part of the reason for low rates of divorce among millennials is a higher average of education and the resulting financial stability associated with higher education.
The problem is when people have more financial resources, when they do end up getting divorced it can make the process far more difficult and possibly more acrimonious. The more net worth a couple has, the more complicated splitting assets becomes. In community property states, all property acquired during the marriage is split 50-50.
Only nine states are community property states. Community property may make things easier but it’s not always the most fair method. The majority of states are equitable distribution states. Under equitable distribution, all assets acquired during the marriage are split based on fairness, not necessarily equally. The question of what is fair can be answered differently depending on state.
In some states separate property, such as property acquired before marriage, gifts or inheritances, or property acquired after marriage, are considered when deciding distribution even though only marital property is split. Lee Ciccarelli, a divorce attorney in Pennsylvania, says that the reasoning behind this is so that a spouse that may have significantly less in the way of separate assets will not be left in a significantly disadvantaged position after the dissolution of the marriage.
Ciccarelli says the hard part is figuring out each spouses financial background. Even though there are punishment for people that hide assets in anticipation of a divorce, it can be difficult to find evidence of the deception.
One of the most common methods is for a party to transfer funds to an acquaintance or family member. Easier to hide assets such as cash, bonds, and travelers’ checks are usually the easiest to move and hide. People may also convert cash into goods such as jewelry, art, collectibles, and equipment as another way of making it difficult for an accurate accounting of assets.
There are of course ways of finding assets. Formal discovery supervised by the court such as discovery requests, depositions, subpoenas, and motions to compel are usually the first option. An attorney or investigator may look through credit card receipts, insurance statements, bank statements, and other financial documents to try to determine the true state of the opposing spouses finances. This process can be costly and may not even be worth it in some cases. That is, the cost of paying attorneys and investigators may cost more than the assets that are recoverable.
In some cases, it may be nearly impossible to find hidden assets regardless of the techniques used. So while the probability of getting divorced has fallen, the process has not gotten easier, especially if there is more money involved.