The global economy, combined with electronic banking and other technological advances, has made it easier than ever for litigants to conceal assets. Fortunately, financial experts have a number of techniques at their disposal to uncover these assets.
- Bank and brokerage statements, wire transfer confirmations, canceled checks and other financial records;
- Tax returns for hidden assets that may be reflected through as wages, dividends and interest, mortgage interest, or real estate taxes;
- Credit card, insurance, loan and employment applications, which often contain information not reported elsewhere;
- A person’s travel records for patterns that may reveal where assets were acquired or where funds are kept; and
- Public records, including real estate records and court files.
Net worth analysis methods include:
The asset method. This method takes a person’s net worth at the end of the year, subtracts his or her net worth at the beginning of the year, and then adds known income items and subtracts known expenses. If the result is anything other than zero, there is income from unknown sources.
The expenditures method. This approach looks for discrepancies between a person’s expenditures and his or her known sources of funds, such as salaries, inheritances, loans, gifts and cash on hand at the beginning of the year.
The bank deposits method. Here the assumption is that all money is either spent or deposited. If net deposits plus cash expenditures exceed known sources of funds, an undisclosed source of funds exists.
Unknown sources of funds don’t necessarily reflect illicit activities. For example, loan proceeds and redeposits of unused cash aren’t income. But they do provide attorneys and their financial experts with promising avenues of investigation.