Uncovering financial secrets during a divorce

On Behalf of | Feb 26, 2019 | Divorce

When Minnesota couples consider divorcing, at many times the trust has long since been broken. Tensions involving finances often help impel a couple toward ending their marriage. In some instances, spending patterns or excessive debt are issues, while in other cases, infidelity can also lead to financial decisions that prioritize another person.

In other cases, people want to hide assets in order to avoid dividing them in the divorce. In all of these types of incidents, however, people could learn a great deal by scrutinizing income tax returns. One person voluntarily overpaid the IRS by hundreds of thousands of dollars, planning to recoup the benefits later after the divorce. However, when his soon-to-be ex-wife reviewed their records with the IRS, she learned of the deception before the divorce was finalized. There are a number of tax documents that can shed light on a couple’s finances, especially when a divorce is looming ahead. For example, W-2 forms not only contain each spouse’s income but also withholdings for retirement savings, health savings accounts or other deferred compensation plans.

Schedules attached to an annual tax return require reporting on interest received as well as capital gains and losses. People who are happy to lie to their spouses may be more concerned about the consequences of deceiving the IRS and reveal otherwise hidden brokerage or investment assets. When small businesses are involved, the finances can become even more complex. Some people may attempt to use corporate entities to hide evidence of an affair or other financial transactions.

People who are considering a divorce know that the financial aspects of the end of a marriage can be some of the most significant. A family law attorney can help people advocate for their rights through negotiating a settlement on property division, spousal support and other legal matters.