[0:01] Welcome to Navigating Complex Divorce and Parenting Issues with Attorney Melanie Walls.
[0:06] Hello everyone and welcome to Navigating Complex Divorce and Parenting Issues with Attorney
[0:12] Melanie Walls.
[0:14] Melanie is an OSBA certified specialist in family relations law, who works with clients
[0:19] on complex financial matters, including cases where income assets or financial activity
[0:26] may not be fully transparent at the outset.
[0:28] I'm Sean O'Connor and today Melanie and I are looking at how undisclosed assets are identified
[0:35] in divorce cases and what signs tend to raise concern.
[0:40] How those issues are addressed, as the case moves forward, also comes into play, of course.
[0:46] Melanie, good to see you.
[0:47] Good to see you Sean.
[0:49] You've been practicing what, 20 years?
[0:53] 28 years.
[0:54] 28 years.
[0:55] Okay, so I know, when you say it all out, it's like, oh wow.
[1:02] So you've got the experience.
[1:03] I'm curious, you know, from what you've seen, what usually raises concern that assets or income
[1:10] may not be fully disclosed in a divorce case.
[1:13] What have you seen?
[1:14] Most of the time you see it in their lifestyle.
[1:20] You'll have someone fill out a financial affidavit saying that they make a certain amount
[1:27] of money or, you know, they have a certain vehicle and then lo and behold, you know, one
[1:36] of our best tools in this practice area is social media.
[1:43] You find out so much on social media that people don't realize you're going to find out.
[1:52] So for example, you know, you may have shut down your social media page, but guess what?
[2:00] Your friends didn't.
[2:02] And your spouse is still social media friends with your friends.
[2:07] So you're telling the court in an affidavit that you drive a Toyota pickup truck and you're
[2:18] seeing all over social media driving a Lamborghini or a Porsche or you're telling the court
[2:26] that you make a certain amount of money and you can't pay support because you're struggling
[2:34] to pay the bills and your income is limited and then you're seeing on, you know, social
[2:44] media in, you know, Italy or Spain or on your third cruise of the year.
[2:53] You know, it sounds sort of cliché or corny to say, but I mean, people love social media
[3:02] and, you know, so do divorce attorneys because it really, it really helps us out sometimes.
[3:11] I hear about it in another context too.
[3:13] I mean, it makes a lot of sense, you know, in terms of communication, you know, that you've
[3:18] had with people that, you know, nothing to do with hiding assets necessarily, but yeah, social
[3:23] media, some modern, modern day constant for sure.
[3:29] So you know, you're doing the sleuthing, so to speak, you've identified some concerns
[3:35] about the potential for, you know, a lack of transparency, shall we say.
[3:41] What are the first steps taken to begin building a, you know, a more accurate, complete financial
[3:47] picture?
[3:48] In Ohio, most courts have what we call a mandatory disclosure order.
[3:55] So when someone files a complaint for divorce, there's a list of documents.
[4:00] The court says that you must exchange with the other party deeds to real estate tax returns
[4:09] for the last three years current income documents, current bank statements, current credit card
[4:16] statements, all of that must be exchanged, but that's just really an outline of the financial
[4:24] picture.
[4:26] What you want to do is issue discovery to the other side, which is, you know, interrogatories
[4:32] and requests for production of documents, provide your last three years of, you know, your
[4:39] Venmo, your PayPal, your Zell, your bank statements, your credit card statements.
[4:46] You want to do a deeper dive into the finances.
[4:51] And then sometimes you will have a client say, I know he has other bank accounts.
[4:58] I know this isn't everything.
[5:00] Then at that point, once you've done discovery, your next step would be to issue subpoenas.
[5:08] If you know where he banks issue a subpoena to that bank for any and all bank records under
[5:14] that particular social security number or if a spouse thinks the other spouse is, you
[5:22] know, hiding money somewhere, you know, issue a subpoena to each of the banks near where
[5:29] they work or where they reside to try and find assets that that spouse did not disclose.
[5:38] So, you know, you start with the tools that the court provides you.
[5:45] And then, you know, ultimately, you know, you may just have to issue subpoenas just to see
[5:51] if there's anything else out there.
[5:54] Well, you don't, you mentioned, you know, a spouse tipping you off or just expressing the view
[6:01] that there's other bank accounts out there.
[6:05] Are there other types of inconsistencies that you see that stand out as indicators that,
[6:11] you know, something may be a mess?
[6:13] Once you do the financial disclosure and you have bank statements and you have credit card statements,
[6:20] you need to take a detailed look at those documents.
[6:23] For example, you know, a checking account where you see a significant amount of cash withdrawals,
[6:32] you know, $400 a week or something along those lines.
[6:36] I mean, that's a red flag, you know, where's that money going?
[6:40] Why are they taking cash out?
[6:42] Is this, you know, historically, how they did their finances during the marriage or is this
[6:47] something that just started within the last year or within the last six months?
[6:53] You want to look at, you know, discrepancies between, you know, what they're reporting as
[6:58] their income and what they're actually spending.
[7:01] I mean, people get caught that way a lot more times than you'd think when they tell the
[7:08] court in an affidavit, I make X, but yet when you look at their credit card payments and their
[7:16] bank deposits, you know, it's significantly more than what they stated as their income.
[7:23] So that's where some common inconsistencies come in and where people get caught not being
[7:30] fully transparent with the other side or with the court.
[7:35] I mean, I think oftentimes complexity or discovery is necessary just around business ownership
[7:45] or when, you know, someone's in a self-employment situation and, you know, the financial picture
[7:51] is just a little bit more nuanced.
[7:54] How do those situations affect the ability to identify missing or understated income?
[8:02] Businesses are my favorite part of the divorce process.
[8:05] I have a bachelor's degree in business management and I love getting businesses in a divorce.
[8:13] You look at a lot of different things.
[8:15] You have to look at the business credit card.
[8:17] You have to look at the business bank accounts.
[8:20] You look at the business tax returns.
[8:23] You have to look at all of that.
[8:25] You look at, you know, how vehicles are titled.
[8:28] Are they, you know, titled the boat in Florida, you know, to the family owned business?
[8:35] You know, what business needs a boat in Florida?
[8:39] Credit cards.
[8:40] Are they running all of their vacations on the business credit card?
[8:44] You know, it's, it's pretty prevalent for business owners to run a great deal of personal expenses through their business.
[8:59] You know, they may not get caught by the IRS but guess what, they're, they're going to get caught by their spouse's divorce attorney
[9:07] because all of those expenses are income to that spouse.
[9:12] So it's, it's pretty important to, to really do a deep dive into the financials.
[9:18] And even more so when it's a complex business, you don't want to spend a turni time going through, you know,
[9:28] years of credit card statements and bank statements.
[9:32] You want to hire your expert to do a forensic examination of those financials and issue you a report.
[9:42] And that report will say, here are all the expenses that we deem business.
[9:49] And here are all the expenses that we deem personal.
[9:54] And this spouse's earnings are actually X when, you know, that spouse was giving them self, let's say a W2 for 300,000 a year.
[10:08] And if you don't look into the financials and you use that W2 of 300,000 a year to calculate support.
[10:17] You've got a problem when your expert comes back and says, well, yes, they issued a W2 for 300,000.
[10:25] But guess what, when we add in all these personal expenses, their income is actually 500,000 a year.
[10:33] So, I mean, it's extremely important in more complex cases to bring in your expert to do those types of analytical reports.
[10:44] Got it, got it.
[10:45] What about situations where, and I think we've all heard of this or seen the movie, you know, you know, assets get, you know, transferred or moved or retitled, you know, obviously to potentially hide them, I'm guessing.
[10:58] You know, how are those transactions analyzed within the, you know, within the broader timeline of the case, the courts only going to go back so far, courts don't like to go back behind the date of the filing of the complaint.
[11:13] But if you've got a spouse who, you know, six months before they fought for divorce, they transferred, you know, the Lamborghini to their brother.
[11:25] And, you know, they transferred the yacht to their father, I mean, obviously that's not an arm's length transaction and the court is going to undo that.
[11:37] But if you have a spouse that, for example, knows they want to terminate their marriage and says, you know what, we've got a lot of debt here.
[11:48] I'm going to sell the boat and pay off all these credit cards, you know, that's not financial misconduct, that's not, that's not, you know, trying to hide an asset.
[12:00] So the court's going to look at, you know, the timing of the transfer, the nature of the transfer, was it an arm's length transaction or did you, you know, title the boat to your buddy.
[12:14] And they're also going to look at, if it was a sale, you know, where did those funds go on, you know, is there a tracing of those funds, did the funds go back into the joint marital account, did the funds go to pay off marital debt or all the funds missing and the spouse can account for them.
[12:36] Then obviously that would be suspect to the court, you know, in, you know, if it does churn out, you know, the scenario runs where the assets are fully disclosed, how does that affect the way the case is handled or resolved.
[12:53] You know, Ohio has a statute that specifically addresses, you know, a failure to disclose all of your marital assets and, you know, there can be penalties for that after your case is over and it's discovered.
[13:07] You know, six months after your divorce that you had, you know, an account that that you didn't disclose, you can be liable to your spouse for three times that that amount.
[13:20] Now, if it happens during the course of a case, you know, for example, where we find out a spouse, who's from another country has bank accounts in that country that they didn't disclose or.
[13:38] You know, they've been sending money to their dad in Italy, you know, for the last six months to the tune of, you know, tens of thousands of dollars and they didn't, didn't disclose this account and it comes out at trial or shortly before trial, the last thing you want to do is lose credibility with the court.
[14:04] The last thing you want your client to do is to make the court mad, you know, you can't undo that damage, you can't unring that bell, so you cannot stress enough to your client.
[14:22] Uh, it's going to be discovered sooner or later, so be transparent, there is nothing to be gained by trying to hide something because it's not a good look when you're on that witness stand and you get caught.
[14:39] Like you said, you know, you might be able to fool the IRS, but they're looking at, you know, millions and millions of situations and, you know, a good a good divorce attorney is laser focused on on one particular set of accounts and so it makes sense that.
[14:57] Uh, people get discovered more often than you'd, than you'd think, you know, I was going to close with this idea or the question around, you know, what is it, you know, what do you tell your clients that helps ensure that financial disclosures or thorough and accurate from the outset.
[15:13] Uh, you just mentioned, well, you know, there's serious fines and credibility, all sorts of ramifications, are there, are there a couple of things that you do or advise your clients specifically that that helps this helps things go right from the outset.
[15:30] When I have a client come in for an initial consultation and they have not yet filed for divorce, the other spouse has not yet filed for divorce.
[15:42] I encourage them to educate themselves about the finances of their marriage.
[15:50] How are bills paid, where, where do you, where do you bank, where, where does your spouse bank, what, what credit cards do you have, you know, do you have a chase, do you have an American express.
[16:03] Um, know your finances, do your homework, make sure you have an understanding, look at your tax returns, if you have an accountant, schedule a meeting with your accountant, have your accountant explain the family, you know, finances to you, use your CPA to educate yourself.
[16:26] I think the more you know the better off you are, sadly, you do see people come through the door that have let their spouse control every aspect of the finances during their marriage.
[16:41] And they don't know what retirement counts accounts they have, they don't know where they bank, they, they, they know that they have an American express and a, and a chase card, but they have no idea, you know, how many credit cards their spouse has, they, they just don't know anything about the family finances and, you know, in that case, you, you can't rely on your client.
[17:10] You have to rely on the tools of the legal process and that's where you're the courts mandatory disclosure, the interrogatories requests for production documents, requests for admissions, depositions, all your discovery tools come into place.
[17:29] And, you know, sometimes when your grasp and it straws, you, you know, you may issue subpoenas to, to various places, just to see if there's anything out there.
[17:42] I hear you. Well, that's some, yeah, I mean, those scenarios aren't that surprising, I guess, sometimes there's just a division of labor on some of that stuff. And it's like, yeah, I didn't concern myself with the money side of things, but.
[17:55] That sounds like good advice, obviously, if you're heading towards a divorce, start to do some homework. Well, Melanie is always great talking with you.
[18:05] You too, Sean, I'll talk again. I'll talk to you again soon. I'm sure that wraps up today's episode of navigating complex divorce and parenting issues with attorney Melanie walls.
[18:17] If you want to learn more about Melanie's practice or request a consultation, visit her website, Melanie walls law.com. I'm Sean O'Connor. Thanks for listening. And please, you know, leave a review, share a link.
[18:32] Of the episode with someone who you think might benefit from it. And we appreciate it. Have a great day.
[18:44] Thanks for watching. Be sure to hit that like and subscribe button and leave us a review in the comments.
[0:06] Hello everyone and welcome to Navigating Complex Divorce and Parenting Issues with Attorney
[0:12] Melanie Walls.
[0:14] Melanie is an OSBA certified specialist in family relations law, who works with clients
[0:19] on complex financial matters, including cases where income assets or financial activity
[0:26] may not be fully transparent at the outset.
[0:28] I'm Sean O'Connor and today Melanie and I are looking at how undisclosed assets are identified
[0:35] in divorce cases and what signs tend to raise concern.
[0:40] How those issues are addressed, as the case moves forward, also comes into play, of course.
[0:46] Melanie, good to see you.
[0:47] Good to see you Sean.
[0:49] You've been practicing what, 20 years?
[0:53] 28 years.
[0:54] 28 years.
[0:55] Okay, so I know, when you say it all out, it's like, oh wow.
[1:02] So you've got the experience.
[1:03] I'm curious, you know, from what you've seen, what usually raises concern that assets or income
[1:10] may not be fully disclosed in a divorce case.
[1:13] What have you seen?
[1:14] Most of the time you see it in their lifestyle.
[1:20] You'll have someone fill out a financial affidavit saying that they make a certain amount
[1:27] of money or, you know, they have a certain vehicle and then lo and behold, you know, one
[1:36] of our best tools in this practice area is social media.
[1:43] You find out so much on social media that people don't realize you're going to find out.
[1:52] So for example, you know, you may have shut down your social media page, but guess what?
[2:00] Your friends didn't.
[2:02] And your spouse is still social media friends with your friends.
[2:07] So you're telling the court in an affidavit that you drive a Toyota pickup truck and you're
[2:18] seeing all over social media driving a Lamborghini or a Porsche or you're telling the court
[2:26] that you make a certain amount of money and you can't pay support because you're struggling
[2:34] to pay the bills and your income is limited and then you're seeing on, you know, social
[2:44] media in, you know, Italy or Spain or on your third cruise of the year.
[2:53] You know, it sounds sort of cliché or corny to say, but I mean, people love social media
[3:02] and, you know, so do divorce attorneys because it really, it really helps us out sometimes.
[3:11] I hear about it in another context too.
[3:13] I mean, it makes a lot of sense, you know, in terms of communication, you know, that you've
[3:18] had with people that, you know, nothing to do with hiding assets necessarily, but yeah, social
[3:23] media, some modern, modern day constant for sure.
[3:29] So you know, you're doing the sleuthing, so to speak, you've identified some concerns
[3:35] about the potential for, you know, a lack of transparency, shall we say.
[3:41] What are the first steps taken to begin building a, you know, a more accurate, complete financial
[3:47] picture?
[3:48] In Ohio, most courts have what we call a mandatory disclosure order.
[3:55] So when someone files a complaint for divorce, there's a list of documents.
[4:00] The court says that you must exchange with the other party deeds to real estate tax returns
[4:09] for the last three years current income documents, current bank statements, current credit card
[4:16] statements, all of that must be exchanged, but that's just really an outline of the financial
[4:24] picture.
[4:26] What you want to do is issue discovery to the other side, which is, you know, interrogatories
[4:32] and requests for production of documents, provide your last three years of, you know, your
[4:39] Venmo, your PayPal, your Zell, your bank statements, your credit card statements.
[4:46] You want to do a deeper dive into the finances.
[4:51] And then sometimes you will have a client say, I know he has other bank accounts.
[4:58] I know this isn't everything.
[5:00] Then at that point, once you've done discovery, your next step would be to issue subpoenas.
[5:08] If you know where he banks issue a subpoena to that bank for any and all bank records under
[5:14] that particular social security number or if a spouse thinks the other spouse is, you
[5:22] know, hiding money somewhere, you know, issue a subpoena to each of the banks near where
[5:29] they work or where they reside to try and find assets that that spouse did not disclose.
[5:38] So, you know, you start with the tools that the court provides you.
[5:45] And then, you know, ultimately, you know, you may just have to issue subpoenas just to see
[5:51] if there's anything else out there.
[5:54] Well, you don't, you mentioned, you know, a spouse tipping you off or just expressing the view
[6:01] that there's other bank accounts out there.
[6:05] Are there other types of inconsistencies that you see that stand out as indicators that,
[6:11] you know, something may be a mess?
[6:13] Once you do the financial disclosure and you have bank statements and you have credit card statements,
[6:20] you need to take a detailed look at those documents.
[6:23] For example, you know, a checking account where you see a significant amount of cash withdrawals,
[6:32] you know, $400 a week or something along those lines.
[6:36] I mean, that's a red flag, you know, where's that money going?
[6:40] Why are they taking cash out?
[6:42] Is this, you know, historically, how they did their finances during the marriage or is this
[6:47] something that just started within the last year or within the last six months?
[6:53] You want to look at, you know, discrepancies between, you know, what they're reporting as
[6:58] their income and what they're actually spending.
[7:01] I mean, people get caught that way a lot more times than you'd think when they tell the
[7:08] court in an affidavit, I make X, but yet when you look at their credit card payments and their
[7:16] bank deposits, you know, it's significantly more than what they stated as their income.
[7:23] So that's where some common inconsistencies come in and where people get caught not being
[7:30] fully transparent with the other side or with the court.
[7:35] I mean, I think oftentimes complexity or discovery is necessary just around business ownership
[7:45] or when, you know, someone's in a self-employment situation and, you know, the financial picture
[7:51] is just a little bit more nuanced.
[7:54] How do those situations affect the ability to identify missing or understated income?
[8:02] Businesses are my favorite part of the divorce process.
[8:05] I have a bachelor's degree in business management and I love getting businesses in a divorce.
[8:13] You look at a lot of different things.
[8:15] You have to look at the business credit card.
[8:17] You have to look at the business bank accounts.
[8:20] You look at the business tax returns.
[8:23] You have to look at all of that.
[8:25] You look at, you know, how vehicles are titled.
[8:28] Are they, you know, titled the boat in Florida, you know, to the family owned business?
[8:35] You know, what business needs a boat in Florida?
[8:39] Credit cards.
[8:40] Are they running all of their vacations on the business credit card?
[8:44] You know, it's, it's pretty prevalent for business owners to run a great deal of personal expenses through their business.
[8:59] You know, they may not get caught by the IRS but guess what, they're, they're going to get caught by their spouse's divorce attorney
[9:07] because all of those expenses are income to that spouse.
[9:12] So it's, it's pretty important to, to really do a deep dive into the financials.
[9:18] And even more so when it's a complex business, you don't want to spend a turni time going through, you know,
[9:28] years of credit card statements and bank statements.
[9:32] You want to hire your expert to do a forensic examination of those financials and issue you a report.
[9:42] And that report will say, here are all the expenses that we deem business.
[9:49] And here are all the expenses that we deem personal.
[9:54] And this spouse's earnings are actually X when, you know, that spouse was giving them self, let's say a W2 for 300,000 a year.
[10:08] And if you don't look into the financials and you use that W2 of 300,000 a year to calculate support.
[10:17] You've got a problem when your expert comes back and says, well, yes, they issued a W2 for 300,000.
[10:25] But guess what, when we add in all these personal expenses, their income is actually 500,000 a year.
[10:33] So, I mean, it's extremely important in more complex cases to bring in your expert to do those types of analytical reports.
[10:44] Got it, got it.
[10:45] What about situations where, and I think we've all heard of this or seen the movie, you know, you know, assets get, you know, transferred or moved or retitled, you know, obviously to potentially hide them, I'm guessing.
[10:58] You know, how are those transactions analyzed within the, you know, within the broader timeline of the case, the courts only going to go back so far, courts don't like to go back behind the date of the filing of the complaint.
[11:13] But if you've got a spouse who, you know, six months before they fought for divorce, they transferred, you know, the Lamborghini to their brother.
[11:25] And, you know, they transferred the yacht to their father, I mean, obviously that's not an arm's length transaction and the court is going to undo that.
[11:37] But if you have a spouse that, for example, knows they want to terminate their marriage and says, you know what, we've got a lot of debt here.
[11:48] I'm going to sell the boat and pay off all these credit cards, you know, that's not financial misconduct, that's not, that's not, you know, trying to hide an asset.
[12:00] So the court's going to look at, you know, the timing of the transfer, the nature of the transfer, was it an arm's length transaction or did you, you know, title the boat to your buddy.
[12:14] And they're also going to look at, if it was a sale, you know, where did those funds go on, you know, is there a tracing of those funds, did the funds go back into the joint marital account, did the funds go to pay off marital debt or all the funds missing and the spouse can account for them.
[12:36] Then obviously that would be suspect to the court, you know, in, you know, if it does churn out, you know, the scenario runs where the assets are fully disclosed, how does that affect the way the case is handled or resolved.
[12:53] You know, Ohio has a statute that specifically addresses, you know, a failure to disclose all of your marital assets and, you know, there can be penalties for that after your case is over and it's discovered.
[13:07] You know, six months after your divorce that you had, you know, an account that that you didn't disclose, you can be liable to your spouse for three times that that amount.
[13:20] Now, if it happens during the course of a case, you know, for example, where we find out a spouse, who's from another country has bank accounts in that country that they didn't disclose or.
[13:38] You know, they've been sending money to their dad in Italy, you know, for the last six months to the tune of, you know, tens of thousands of dollars and they didn't, didn't disclose this account and it comes out at trial or shortly before trial, the last thing you want to do is lose credibility with the court.
[14:04] The last thing you want your client to do is to make the court mad, you know, you can't undo that damage, you can't unring that bell, so you cannot stress enough to your client.
[14:22] Uh, it's going to be discovered sooner or later, so be transparent, there is nothing to be gained by trying to hide something because it's not a good look when you're on that witness stand and you get caught.
[14:39] Like you said, you know, you might be able to fool the IRS, but they're looking at, you know, millions and millions of situations and, you know, a good a good divorce attorney is laser focused on on one particular set of accounts and so it makes sense that.
[14:57] Uh, people get discovered more often than you'd, than you'd think, you know, I was going to close with this idea or the question around, you know, what is it, you know, what do you tell your clients that helps ensure that financial disclosures or thorough and accurate from the outset.
[15:13] Uh, you just mentioned, well, you know, there's serious fines and credibility, all sorts of ramifications, are there, are there a couple of things that you do or advise your clients specifically that that helps this helps things go right from the outset.
[15:30] When I have a client come in for an initial consultation and they have not yet filed for divorce, the other spouse has not yet filed for divorce.
[15:42] I encourage them to educate themselves about the finances of their marriage.
[15:50] How are bills paid, where, where do you, where do you bank, where, where does your spouse bank, what, what credit cards do you have, you know, do you have a chase, do you have an American express.
[16:03] Um, know your finances, do your homework, make sure you have an understanding, look at your tax returns, if you have an accountant, schedule a meeting with your accountant, have your accountant explain the family, you know, finances to you, use your CPA to educate yourself.
[16:26] I think the more you know the better off you are, sadly, you do see people come through the door that have let their spouse control every aspect of the finances during their marriage.
[16:41] And they don't know what retirement counts accounts they have, they don't know where they bank, they, they, they know that they have an American express and a, and a chase card, but they have no idea, you know, how many credit cards their spouse has, they, they just don't know anything about the family finances and, you know, in that case, you, you can't rely on your client.
[17:10] You have to rely on the tools of the legal process and that's where you're the courts mandatory disclosure, the interrogatories requests for production documents, requests for admissions, depositions, all your discovery tools come into place.
[17:29] And, you know, sometimes when your grasp and it straws, you, you know, you may issue subpoenas to, to various places, just to see if there's anything out there.
[17:42] I hear you. Well, that's some, yeah, I mean, those scenarios aren't that surprising, I guess, sometimes there's just a division of labor on some of that stuff. And it's like, yeah, I didn't concern myself with the money side of things, but.
[17:55] That sounds like good advice, obviously, if you're heading towards a divorce, start to do some homework. Well, Melanie is always great talking with you.
[18:05] You too, Sean, I'll talk again. I'll talk to you again soon. I'm sure that wraps up today's episode of navigating complex divorce and parenting issues with attorney Melanie walls.
[18:17] If you want to learn more about Melanie's practice or request a consultation, visit her website, Melanie walls law.com. I'm Sean O'Connor. Thanks for listening. And please, you know, leave a review, share a link.
[18:32] Of the episode with someone who you think might benefit from it. And we appreciate it. Have a great day.
[18:44] Thanks for watching. Be sure to hit that like and subscribe button and leave us a review in the comments.
