Understanding Your Assets and Asset Value

How much opportunity has your spouse had to alter any of the financial figures? Does your spouse receive a regular paycheck, with no chance to affect the amount paid, other than by not going to work? Does your spouse run a business, whether as a sole proprietor, with other partners or as a large shareholder in a small corporation? If your spouse has the power to control income, that power can also be exercised to control the amount of support you may get, or pay.

Yvonne believed that Stan was paying all his living expenses through the small corporation he controlled. He enjoyed a high life style while apparently cheating the government on taxes. It drove her wild when Stan presented his financial statement showing he lived a modest life style on a relatively small salary.

Our accountant examined the books of the corporation, but couldn’t catch Stan with anything. He had always kept the books himself, and he was good at it. There were no inconsistencies. It was impossible to trace any payments to Stan other than his salary. The retained earnings in the corporation were quite low. Stan didn’t have any personal bank records beyond those showing his salary, and there were no expense records. Yvonne had to settle for a support order below what she might have received if we could prove Stan’s "true" income was higher.

The result in a similar situation for April was much different. Tom kept two sets of books for his cash business. Armed with a photocopy of the "real" income sheets, April got an extraordinarily high support order from Tom. The amount of support Tom would have paid by applying the support schedule to his reported income was much less.

Are the lists of assets and liabilities reliable? Have you participated in handling the family finances? Has your spouse handled everything? If your spouse has been the only one managing the funds, the investments must be checked. The degree of scrutiny depends upon the degree of control. It’s helpful to spot check the areas most suspect to see if a thorough review is necessary.

For example, Bart managed all the investments for Denise and himself. Most of the money was Denise’s separate property. We were able to subpoena records from banks Denise had never heard of to show that Bart was actually laundering her money. He would take sales proceeds, dividends and interest from her investments, then reinvest them in both of their names. Of course, he kept his separate property as separate!

While it is impossible to itemize what you don’t know about, in most families there is simply no ability to hide income and investments: all the income is known, and is committed to paying known expenses and making known investments. Write down your level of concern based on the degree of financial control that your spouse has exercised (from no problem, to a need to check everything). Add any reasons why you think the financial records should be accepted as is, spot-checked or subjected to an audit.