How To Tackle Whether Your Ex-Spouse is Hiding Money and Assets in Your Separation or Divorce in Ontario!
If you’re looking for another way to find out whether your ex-spouse is hiding money, assets and investments when they provide very little documents and proof to you or your lawyer, you can use the net worth method.
Hi, my name is Thomas O’Malley. I’m an experienced family lawyer in Durham Region and the GTA.
This method consists of several steps. First, you identify the net worth of the spouse at the start of a time period and the known net worth at the end of that period. The difference between these two figures is the change in net worth.
Net worth refers to the amount by which a spouse’s total assets exceed their liabilities, but it has a slightly different meaning to uncover unreported income.
For the purposes of uncovering unreported income, you determine the total assets at the beginning of the period based on what it cost to acquire those assets, and then you determine the assets at the end of that period based on what it cost to acquire those assets.
You must generally use the cost of each asset rather than the fair market value so that you do not mix any natural growth in the calculations, such as stock market gains.
Living expenses are then added. If was money was spent, it had to come from somewhere. Since it was spent, it does not appear anywhere in the remaining net worth. The living expenses, therefore, represent funds that no longer exist.
Finally, reported income is deducted since that may account for funds used to increase the net worth or to pay for living expenses.
If a person’s net worth increased over a five-year period by $10 million on a cost basis (i.e, $10 million was spent on assets), and living expenses during that period was $2 million and reported income was $3 million, then the presumed unreported income was $9 million.
This is calculated by starting with the $10 million increase in net worth, adding the $2 million that was spent, and subtracting the $3 million that was reported. Looking at it in reverse, you ask how it was possible to spend $10 million on new asset purchases and another $2 million on living expenses, when the reported income was only $3 million.
This method is best suited for situation where (a) the spouse seems to have acquired a large number of assets or seems to have spent far more than they earned; and (b) the spouse maintains few or no books and records, or they withhold their books and records, or their books and records are unavailable, or the books and records are inadequate.
The beauty of the net worth method is that the logic is clear and the methodology is often easy to use.
If you have any questions about your separation, divorce or family law case and you would like our help, there’s a few ways to contact our office.
You can leave a message on my Facebook law office page, visit my website at www.canadiandivorcelegaladvice.com, or call me directly at 905-434-8837. We would be happy to speak to you.
Oh, by the way, did you know you can protect your family law rights and get essential information on settling your family law issues with your former spouse with the daily indispensable family law advice and tips at my FREE Facebook group?
Click here to find out more: Durham Region Separation and Divorce Legal Support Group
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