Podcast Episode 9: My ex is hiding money, what do I do?

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Jessica Hamilton (JH): Hello and welcome to the Family Five Podcast with Ivy Law Group where we tackle the tough family law issues in the time it takes you to drink your coffee. I’m Jessica Hamilton, I’m the Marketing Manager for Ivy Law Group, and I’m joined by my boss, Shane Neagle, who is the director of Ivy Law Group and the family lawyer extraordinaire. In this podcast, we will take a five in five approach, five questions in five minutes. Our aim is to keep the podcast light, easy to understand, and to give you some valuable information to take away with you.

JH: All right, we’re back with another episode. How are you today, Shane?

Shane Neagle (SN): I’m really busy and what about you, how are you?

JH: Busy too. So busy *laughs*.

JH: So today what we’re going to be doing is talking a little bit more about the role of a forensic accountant in a family law matter. I know in a previous podcast we talked about financial abuse, but in this episode, we’re going to focus more on what happens when the other party is hiding assets and how that can then be uncovered and how it relates to your family law matter. So if you suspect that your partner is hiding money from you, what’s the first thing that you should do?

SN: One of the first things is to just be calm, because you don’t want to be giving up the ghost too quickly to the other person that you’re on to something where you think there’s tens, 20, even hundreds of thousands of dollars that have gone missing. That’s the first thing you do. The second thing is try to collate some evidence of what’s going on. And again, sorry, here we are, come and see a lawyer.

JH: So in family law matters, there’s something called financial disclosure and it’s very important. Can you explain to everyone out there in layman’s terms what this is?

SN: So financial disclosures are kind of a unique thing to family law in that parties, if there’s a dispute, are obliged to give up all relevant documentation to do with assets and liabilities. And that means giving up, normally, your last 12 months of bank statements of your business or personal account, your last few pay slips, tax returns for the last three year, etc.. And that’s mandatory normally, to be giving (those things up). It’s not like there’s a policeman that comes around the corner when you don’t do it, because those issues, if you don’t comply with the rules, can come back and bite a person if there’s ever litigation in a case, because the court can do all sorts of things in relation to people who don’t disclose assets or have hidden assets even. But they’re two very different topics (for another time).

JH: So in a family law matter, if there is someone who has been hiding assets or they haven’t disclosed those assets, what normally happens?

SN: The way to approach the question is that you suspect, for instance, your husband or wife or partner has definitely got $200,000 that they’ve squirreled away (somewhere). Unfortunately due to privacy rules, you can’t go to their banks around Australia or financial institutions to find out about that, but you strongly suspect because four people have told you they saw him (or her) putting money in there.

Unfortunately, your art of persuasion might be getting nowhere and, in fact, only emboldening the person to even further hide assets. Or, secondly, a lawyer’s letter might be getting nowhere with the person or with their lawyer. In circumstances where you have really good evidence, it might be the case that legal proceedings have to be issued and a subpoena (that’s a formal document) is issued on a bank or somewhere where you think the monies might be. You can’t always be guaranteed that you’re going to find the location of the bank where it’s (the money) at.

So your question about when does a forensic accountant come into play, there’s three main ways. The first main way is that, for example, a business needs to be valued and the other person’s giving a version of that company without getting an independent expert together, that you might obtain a forensic accountant to look over the financial documents that have been given to you and to locate indiscrepancies. They would come in where you have a complicated company and trust set up, where there’s been multiple transactions and loans and tax issues and obligations that haven’t been fulfilled.

JH: So do you have any examples to share of outcomes in cases where a forensic accountant was used versus when it wasn’t?

SN: Yes, we had one really interesting case where the spouse had hidden a transaction virtually, in a roundabout way, of around about 130 million. Very fortunately in that case, there was a particular country who bought the interests internationally in his company, in that country. They had to give a public announcement to the share registry about the transaction. So we found out everything about it as it was in the public record, but we then had to make sense of it because there was different share transactions between different countries, where things had happened and different values (were) ascribed to each of the assets.

It was very complicated and that that one was fantastic because we uncovered something along the lines of $150 million they actually had hidden in relation to a deal that was reached under a binding financial agreement that we had turned over, by consent of (both) the parties and a new one was entered into where she obtained the just and equitable property settlement that included those assets that he hid.

In instances where they (the forensic accountant) don’t get involved, well, sometimes you see clients have really prejudiced themselves and their rights by saying, well, I don’t want to go down that rabbit hole. In a nutshell, the real problem too for people, is sometimes these types of professional people and the processes that they have to undertake, cost a lot of money. And you know, you wouldn’t be surprised (for it) to be between 20 to $40,000 looking over a couple of companies and some trusts and things.

JH: So what if someone can’t afford that? What would they do?

SN: It’s mostly the case that, in these types of situations, there will be some assets that can be claimed against at the end of a matter. So, many lawyers will take fees at the end of a matter, but that won’t pay for disbursements. (To save costs) the lawyer could give you ideas, or you could rely on your local accountant to try to uncover things at a lesser expense.

JH: Okay. So I think we’re at time now. Let’s just end with a little bit of a joke. Have you got one for us today, Shane?

SN: When I get to work, Jessica, the first thing I do is hide. Do you know why? Because they say a good worker is hard to find.

*laughter*

JH: Thanks Shane.

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JH: Thanks for tuning in. And don’t forget to save us to your favorites wherever you listen to your podcast, so that you don’t miss an episode. It’s important to note that the contents of this podcast are intended as a general guide to the subject matter. And if you are looking for specific advice about your individual circumstances, then we would recommend getting in touch with one of our friendly family lawyers.