Guest Post – Lifestyle Analysis in Divorce Proceedings: Uncovering Hidden Assets

I felt like I was blindsided twice in my divorce – first by my husband and then again by the courts. The court system is overwhelming, the process is scary and the outcomes are potentially life-altering.  This information and advice from an attorney who has been there, done that may help you go into your divorce better prepared than I was and with a better outcome than I had.  I hope so.


Lifestyle Analysis in Divorce Proceedings: Uncovering Hidden Assets

Divorce, or dissolution of marriage, is a highly personal, emotional experience that goes much smoother if the parties are willing to cooperate. Despite the obvious benefits of working together, divorce remains a fairly adversarial process that can sometimes get downright malevolent. Whether you are the spouse filing for divorce or the spouse responding to a divorce action, you should consult a lawyer to make sure you are aware of all your legal rights and obligations. This is especially important if the other party is being difficult. One of the most significant aspects present in every divorce where an attorney’s advice can make a big difference is in reviewing financial matters.


The Financial Affidavit

All divorce proceedings, whether contested or not, require each party to complete a financial affidavit that discloses all assets, income, expenses, and liabilities. These affidavits are known by different names, such as “Verified Financial Disclosure Statement” in Indiana, and “Verified Disclosure Statement” in Kentucky. No matter what they are called in your state, they must be signed under penalty of perjury that the information provided is correct.


The financial affidavits are essential to the final divorce settlement agreement because they are the basis for deciding child support and property division, and whether one spouse is entitled to maintenance. The affidavits are usually prepared by the client, many of whom take wild guesses at the figures. Thing is, it’s human nature to estimate incorrectly, especially under stress. But because complete accuracy now can make a big difference in your financial future, it may be wise (or even court-ordered) to complete a lifestyle analysis.


The Lifestyle Analysis

In contrast to the financial affidavit, which gives a view into an individual’s finances at a certain point in time, a lifestyle analysis examines several years of financial activity. It looks at the couple’s spending habits along with the day-to-day living expenses incurred during their marriage. The focus is usually on the last three to five years of marriage in order to get a good understanding of patterns, although the longer the time period analyzed, the more credible the report.


The idea is a fairly basic one: if what is being spent on a lifestyle is more than the income that is reported, then it is likely there is another source of income. The analysis usually includes, but is not limited to, researching:

  • Bank records
  • Checkbook registers
  • Credit card statements
  • Credit reports
  • Insurance documents
  • Loan applications and agreements
  • Pay stubs
  • Payroll records if spouse is a business owner
  • Personal and business income tax returns
  • Property tax bills
  • Recurring and ordinary expenses within larger basic categories such as clothing, food, housing, entertainment, travel, etc.
  • Retirement accounts
  • Seasonal expenses
  • Unusual or non-recurring expenses.


There are many different reasons why this documentation and verification of expenditures during the marriage may be needed. The most common reasons are to determine the standard of living during the marriage and to determine the appropriate levels of child support and maintenance. A lifestyle analysis can also be very useful in determining whether a spouse is underreporting income on the financial affidavit, has concealed assets, has overstated debts, or has spent marital monies on activities that could influence the case (such as gambling, drugs or paramours).


While it can sometimes be hard to determine whether a lifestyle analysis is warranted, there are certain red flags that can signal the need to take a closer look. In many instances, one spouse is already suspicious of the other before they are even separated. Any spouse that exerts excessive control over financial matters should be more thoroughly examined as someone who is likely to manipulate financial facts. A spouse with a history of deception, or of pressuring or coercing the other to sign unusual documents, is a prime candidate for analysis. Has your spouse made large purchases without your knowledge? Have large sums of money disappeared without plausible explanations? These are signs that may indicate the need for a more careful evaluation.


Hidden Assets

It’s possible that during the process of completing the financial affidavit or the lifestyle analysis you may discover that your spouse has a financial secret. Comprehensively investigating financial records may reveal that he or she has been hiding income, selling marital assets, buying property, or even bankrolling an extramarital affair. Once exposed through the analysis, this deception can be taken into consideration when the judge determines the divorce settlement agreement.


Concealed assets are typically either placed in the hands of third parties or behind false documents. Common ways of hiding assets include:

  • Bearer municipal bonds
  • Collectibles, possibly kept at a friend’s house or the office
  • Converting cash into personal property that may be overlooked or undervalued
  • Custodial accounts established under a child’s social security number
  • Delaying work bonuses, raises, contracts or stock options until after the divorce
  • Faking debts owed to family or friends
  • Giving gifts (like jewelry or cars) that are to be returned once the divorce is finalized
  • Offshore accounts
  • Safety deposit boxes
  • Secret retirement accounts
  • Series EE savings bonds
  • Transferring money into trusts.


The point of identifying and valuing all the assets is to decide which marital property is subject to division, thereby allowing an equitable apportionment. A spouse who deliberately hides assets can face a number of consequences, including being charged with fraud, ordered to pay the other party’s fees, having his or her claims dismissed, or having the other party be awarded the entirety of the hidden assets. Penalties vary from state to state and are heavily dependent on the circumstances of the case.


Seeking competent and knowledgeable legal advice now will help you avoid costly, long-term mistakes. In order to make certain that you receive and retain all the assets to which you are entitled after a divorce, it is important to talk with a skilled divorce lawyer. In extremely complex situations, divorce lawyers may enlist the assistance of other professionals who have specialized training and expertise in investigating the financial intricacies of a divorcing couple. Financial advisors, CPAs, forensic accountants, and Certified Divorce Financial Analysts® are some of the professionals who may be consulted. It can sometimes take a team to help a spouse stay on the right side of the law while working to secure his or her financial future.


About the Author:

Dana Eberle-Peay is a family attorney in New Albany, Indiana. After going through a tumultuous divorce in 2008, Dana dedicated her professional life to helping others in similar situations. She currently practices law at the McNeely Stephenson Law Offices of New Albany, Indiana.

Thank you for sharing!

6 thoughts on “Guest Post – Lifestyle Analysis in Divorce Proceedings: Uncovering Hidden Assets

  1. Great post for anyone on what to expect (applies in CA). In my experience, a contentious divorce will have false information that can be difficult to prove unless you have an unlimited amount of money to spend on finding the truth. At some point you will have to cut your losses and swallow a bitter pill. All just part of Family Law. Better days lie ahead.

    1. I agree. Hidden assets are tricky and good luck proving they even exist or did exist. People that do these things are cowards, insecure, capitalists, and use people for their own gain, security, and perhaps out of spite, anger, vengeance..etc. even if the person on the receiving end doesn’t deserve what they are being dealt. You are right that one needs to weigh emotional and financial costs and outcomes and try to forgive themselves for trusting the wrong person or people and try to move forward regardless of the limited options that they may be left with.

  2. It is so very overwhelming. I find myself researching EVERYTHING just to make sure I’m not getting screwed or to make sure everything is worded a certain way. I have had to educate myself through the entire process so that I’ll feel confident that everything I sign is as close to perfect as possible. It’s exhausting. I often think about people who trust too much, or believe our court system is fair and flawless, and miss important details. I obsess about the details, trying to prevent it from happening to me.
    Divorce is a B I T C H!

  3. 120fingersandtoes – I'm Sharon. Got an amazing husband, and 4 children who I love but can sometimes be real assholes. But most of the time, they're pretty awesome. This blog will be about my family life, lots of random shit and I also hope to start interviewing interesting people.
    120fingersandtoes says:

    This is a great post. I wish I read this years ago when I went through mine. I went through hell and back, I didn’t know anything and paid a huge financial and emotional price for it. I’ve got a post on my blog about the emotional turmoil I experienced, for those who are about to go through this process, please come visit my blog. Good luck xx

  4. The one thing you need to spend money on during your divorce is a good attorney! That doesn’t always mean that the more expensive, the better the lawyer though. Case in point, my divorce. My lawyer was very fair with his fee’s, but more importantly was he did such a good job. He really cared about me and my boys. He wasn’t the most expensive, but certainly not the cheapest. I did my homework and got recommendations from others that went through some horrible divorces. My ex had a lawyer that worked out of a broom closet and was taking her for a ride. He told her to commit perjury and pulled all kinds of crazy stunts. I checked him out and he had a couple of drunk driving convictions and lots of tax trouble. He also had troubles paying his bills. NOT somebody you want representing you. I appealed to her and asked her to get rid of him. A bad lawyer will drag the process on and on for their own gain. It took her one very long year to figure out this guy was an ambulance chaser and she fired him. Then she got a very expensive lawyer from a fancy law firm whose specialty was immigration and tax law. She was better than the last, but made lots of mistakes and drug the proceedings on longer than they had to be. It was all so frustrating, thank God for my lawyer. Good luck to all of you and make sure you get the right lawyer for the job!!

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