Everyone who is going through a New Jersey divorce or is contemplating a divorce in New Jersey wants their fair share of the assets in equitable distribution. Before the marital assets can be divided they must be identified and valued. It is not uncommon to see one spouse question the honesty of the other spouse’s financial disclosure.
In most marriages there is one spouse who maintains the household finances and the other spouse who is virtually in the dark when it comes to the couple’s finances. This can be especially true when a significant part of the family’s assets are financial instruments that pay or yield interest or issue dividends. These types of assets are not tangible items such as cars, vacation homes, or fine artwork, rather these assets are comparatively bland and, most importantly, can produce significant periodic income. For the spouse that does not maintain the family’s finances the nature extent and amount of these assets can be a mystery and an easy target for a dishonest spouse to conceal.
I’m not suggesting that most divorces in New Jersey have parties concealing assets from each other. However, I am not suggesting that hiding assets does not ever happen in divorce cases. In a New Jersey divorce both parties are required to file a Case Information Statement with the court and each other. Case Information Statement (“CIS”) is a court prescribed financial disclosure form. All of the parties’ assets and liabilities should be disclosed on the Case Information Statement. This is true even if a particular asset or liability is not subject to equitable distribution.
We are often asked by clients, “How do I know if my spouse has listed all of our financial accounts on his or her CIS?” Short answer is there is no way to be absolutely certain your spouse is not hiding assets, but there are things you can do to verify the accuracy of the assets listed on your spouse’s Case Information Statement.
One of the most basic things that can be done is to examine the last couple years of your federal tax return’s Schedule B. Schedule B on Form 1040 is in itemization of interest paid and dividends paid to the taxpayer. You can see a sample Form 1040 Schedule B by clicking here. Part I of Schedule B lists all the accounts that provide interest income and Part II lists the holdings that produce dividend income. It should be noted that not all financial accounts of the taxpayers will be listed on the Form 1040 Schedule B. Some stocks are growth stocks that do not produce dividends. These stocks, and quite possibly the accounts they are held in, would not be identified in the Form 1040 Schedule B.
If you are concerned that your spouse may not have listed all of the assets on his or her case information statement start by comparing your tax returns Schedule B to Part E (Statement of Family Assets ) your spouse’s Case Information Statement. Your spouse may be hiding assets from you if all of the part one interest-bearing accounts are not listed on your Case Information Statement’s Part E Statement of Assets. If you cannot identify the brokerage accounts that are listed in part two of Schedule B of your 1040 then your spouse may be hiding assets. At a minimum you should ask questions and demand to see the account statements.
The next way to confirm that your spouse’s CIS is complete is to compare your current Form 1040 Schedule B to the last several years. If the accounts in part one and part two have changed over the years you should ask why. Often times a change from year to year on a Schedule B means that an account was opened or closed or dividend yielding stocks were either bought or sold. If this is the case, you need to determine either where the money went or where the money came from.
Similarly, if there are wide variations in the amount of interest or dividends paid further inquiry is probably need. Again, there may be very valid explanations for a reduction in dividend income for a particular stock. Sometimes companies dramatically reduce their dividends to meet changing needs of the company in the current environment. A company may no longer be listed on form 1040 schedule the because it was acquired by another company. The point is, the Form 1040 Schedule B will never be 100% determinative of all of the assets that a couple may have but a careful examination of your Form 1040 Schedule B will often reveal the right questions to ask.
At DeMichele and DeMichele we help hundreds of clients determine what is rightfully theirs in equitable distribution. If you have any questions regarding the hiding assets in a New Jersey divorce, the tracking assets in a New Jersey divorce, or have any other questions regarding marital assets contact us, or call (856) 546-1350 for a confidential consultation with one of our skilled equitable distribution lawyers.