Area of Law: Private Investigation
Answer # 991
Locating an ex-spouse's hidden assetsRegion: Ontario Answer # 991
When do spouses hide assets?
People may attempt to hide assets, such as money or property, most often upon the breakdown of a relationship. During separation and divorce assets are valued and then divided according to provincial law, marital status, and whether the couple has any children together. The Ontario Family Law Act decides the division of property upon relationship breakdown, and property includes any money, real estate, pensions and disability benefits, and other assets the couple have.
It is illegal to hide assets during a divorce proceeding. If discovered, a judge can force the guilty party to pay fines, or give the other party the total amount of those assets. In extreme cases, such as a spouse draining large amounts of money from a bank account, RRSP or other investment without the other spouses consent or knowledge, a judge could sentence the guilty party to imprisonment. This is especially true if the case involves a spouse who was not making court-ordered spousal or child support payments.
If a spouse has been hiding assets and has lied or sworn false documents during a divorce to keep those assets hidden, they could be committing the criminal offence of fraud. If convicted, the person could be sentenced to pay restitution to the other spouse, a fine to the court, and/or to imprisonment. In addition, the person will have a criminal record.
Why do spouses hide assets?
A person may decide to hide assets from their spouse during separation or divorce for a number of reasons, such as:
- they feel the law will not divide their assets in a way they would agree with
- they believe they will have to give up or pay more than they actually would
- they have assets that have been earned from illegal activities
- they want to hide certain conduct or behaviour from the other spouse
- they want to reduce or avoid paying spousal or child support
How does a spouse hide assets?
It can be quite easy for someone to hide assets, or simply misrepresent how many assets they have. Often, the person will enlist the help of someone close to them, or will simply open a bank account in secret.
Other ways for a spouse to reduce or hide assets include:
- lending money to family or friends
- generating fake expenses
- transferring finances to a separate account
- not disclosing income
- not disclosing all business assets
- making large purchases
- secretly withdrawing money from accounts such as RRSPs
- transferring ownership of half of a home to a new partner
- transferring interest in a company to other corporate partners
Signs that someone may be hiding assets
There are many signs, or red flags, that may indicate an individual is hiding assets. These include if a spouse:
- wants complete control of bank account information and online passwords
- is secretive about financial affairs
- owns a P.O. Box, private mailbox or safety deposit box
- suddenly claims their business is failing and there is less or no income
- delays employment bonuses or raises
- makes unusually expensive purchases, such as a car or art
- reports a dramatic decrease in value of marital and/or business investments
- deletes computer programs or states that the computer has ‘crashed’
- owns multiple cell phones over a relatively short period of time
- pays suspicious debts to relatives or friends
- has a drug or alcohol addiction
- gambles more frequently than usual
- opens multiple business or personal bank accounts or transfers assets from a joint account into an individual account
- gives large gifts of money or assets to family or friends
- opens custodial bank accounts in children’s names
How can a forensic accountant locate a spouse’s hidden assets?
Forensic accountants are often hired to locate a spouse’s hidden assets. The cost of a forensic assessment and report is usually quite high, averaging about $25,000-$60,000. The spouse that is suspected of hiding assets is normally the one who is responsible to pay for the forensic assessment. These assessments have a very high success rate in tracking hidden money and other assets.
Forensic accountants use many techniques to uncover hidden assets, including:
- Asset searches involve using proprietary databases to find real estate property, vehicles, boats, investments, and corporate and partnership interests anywhere in the world.
- Surveillance is done using tracking systems, photo and video equipment.
- Computer and cell phone forensics involve gathering and evaluating electronic data, and recovering lost or deleted data. Data can be recovered from many sources, including computer hard drives, cell phones and other mobile devices, GPS devices, CD-ROMs, USB memory sticks, and digital cameras.
How can a Private Investigator locate a spouse’s hidden assets?
Private investigators may also be hired to investigate and gather evidence to uncover a spouse’s hidden assets. Different types of surveillance and research techniques used by private investigators include:
- video surveillance
- audio surveillance
- personal observations
- public databases and internet searches
- Personal Property Security Registration (PPSR) searches to identify a lien associated with an individual, or collateral that is shown as a security for payment of a debt
- land registry databases and corporate searches
When investigating, they will look for information about:
- tax returns
- investments and retirement plan distributions
- property tax payments
- any casualty or theft loss claims
- cancelled cheques
- bank accounts
- credit card receipts
- offshore accounts
If possible, an investigator will also look at:
- text messages
- web history
- social media
All of this information will help the investigator gain a broader picture of the true state of the person’s finances.
During investigations, both forensic accountants and private investigators must ensure that they follow all municipal, provincial and federal privacy laws. Following these laws will ensure that the rights and privacy of individuals who may be part of an investigation are protected, and that evidence is collected in a legal manner, and therefore can be used in court.
Both the federal Personal Information Protection and Electronic Documents Act (PIPEDA) and the provincial Freedom of Information and Protection of Privacy Act (FIPPA) require consent for the collection, use and disclosure of personal information. PIPEDA applies to personal information collected by federal private organizations conducting commercial activities. FIPPA governs records held by the provincial government, designated agencies, colleges, and universities.
An individual’s right to privacy is also protected under Canada’s Canadian Charter of Rights and Freedoms.
To conduct an investigation for the purpose of locating a spouse’s hidden assets and for other investigation services, contact our preferred Investigators, Smith Investigation Agency
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