Hannah and Dirk had been married for almost 40 years when they decided to divorce. Their two children were in their thirties and understood that it was probably good for their parents to divorce. The two had worked hard during their forty years together and had accumulated 1.5 Million in assets. The only debt that they had related to their two vehicles.
Hannah claimed that the marriage became increasingly insufferable after the children were grown and gone. During the entire marriage she felt that Dirk had been very controlling and abusive. Hannah had to give Dirk her paychecks and he managed all of the money and would not allow Hannah to spend any money unless it was pre-approved by Dirk. Dirk was very generous with his own parents and siblings and gave them a lot of money from the marital funds over the years, but refused to allow Hannah to give any money to her own family or to spend much time with them. As the marriage deteriorated, Hannah suspected that Dirk was taking money from the marital accounts and hiding it.
Hannah suffered a workplace injury and was no longer able to work outside of the home. It was during that time that she and Dirk agreed to divorce. At that time, Hannah took charge of the money she received for her worker’s compensation claim as well the disability payments she received. She was able to save a considerable amount.
Dirk felt that he should control all of the finances and that any money Hannah contributed he was free to use as he saw fit. He was amenable to the divorce and dividing the assets, but consistently failed to produce all of the information related to his accounts.
I was contacted by Hannah’s attorney and asked to
- Review the financial documents and determine if there was anything amiss
- Prepare a marital balance sheet with recommendations on best ways to divide the assets
The couple had 31 cash and investment accounts at 12 different institutions. In addition they had 5 retirement accounts at 3 different institutions. Not all of the accounts were disclosed. In reviewing the different statements, I found many web transfers, ACH transfers, checks written, and counter withdrawals. Some of those transactions referenced accounts that had not been disclosed. When more statements for additional accounts were provided, I reviewed those statements and found similar transactions. I developed a spreadsheet that allowed me to confirm in many cases that if money was removed from one account that it was deposited or transferred to another account. I also identified $110,000 in checks that Dirk wrote to himself that did not have a corresponding deposit. In addition, I found $101,000 of counter withdrawals where Dirk removed money from accounts and no corresponding deposits were found. I also found reference to interest deposits for a CD that Dirk owned at another bank that had not been disclosed. I found a check that was made out to a bank that we were not provided a statement for until two days before court. In addition, I found that Dirk had funded a margin account at an investment firm that he did not provide statements for. Dirk was trying to call the margin account a loan to diminish his available cash.
To be thorough and fair, I also reviewed Hannah’s statements and found that she had taken withdrawals of $20,000. Hannah explained that once she started managing her own monies that she took that money to cover all of her spending money as she did not want Dirk to continue to track her spending.
When the marital balance sheet was prepared, I included the monies that were unaccounted for as though Dirk would receive those assets. My thought was that although the settlement had not occurred that he had already received those assets. I try and minimize the transfer of assets where I can. So, if accounts are titled in one party’s name, I allocate to that person if possible. This is especially important with qualified retirement plans to minimize the need for QDRO’s. In this case, the lawyer thought that the division should be 50/50 because the couple is already retired and had substantial assets. Dirk was going to stay in the marital home.
So the marital balance sheet was made up essentially of:
- Cash and investments split about 50/50 inclusive of the cash that Dirk had already taken.
- Retirement accounts where Hannah received 71% and Dirk 29%
- Dirk received 100 % of the marital home making up for the uneven distribution of retirement assets
- Personal property and the corresponding car loans were also split 50/50
- Hannah’s Worker’s Compensation settlement of $30,000 was treated as separate property as well as $10,000 of jewelry that she had received from her family prior to her marriage to Dirk.
The lawyers tried diligently to get the couple to settle, but the couple wanted their day in court. In court, the primary issue was the funds that were unaccounted for, a CD that had not been disclosed, and a life insurance policy that Dirk adamantly denied he had. For her part, Hannah admitted that she took the money from her account and spent it on her personal needs.
As Hannah’s attorney questioned Dirk about each transaction that we were unable to account for, Dirk claimed he did not know what happened to the unaccounted for money. At other times he stated that as he made money on his investments he transferred to a bank account and took the money. He stated he knew nothing about the CD he was receiving interest for. He also tried to state that if he had other assets that he was unaware because Hannah was not giving him all of his mail. He also emphatically denied having a life insurance policy despite the fact that the company had sent him some certified mail that Hannah had seen.
Hannah’s attorney did an excellent job of telling Hannah’s story and showing that Dirk was not forthcoming with information about the missing funds or accounts. To counter Dirk, Hannah’s attorney was able to walk me through the missing funds that I identified.
When opposing counsel questioned me, I stuck to the facts and had substantiating documentation for the documents that I had prepared. Despite the lawyer loudly questioning my credibility, numbers, and methodology, I stayed calm and answered his questions with the facts.
The judge ruled as follows:
- The cash was split as I recommended inclusive of the funds that Dirk had already received.
- The retirement accounts were split as I recommended.
- Dirk was ordered to pay Hannah for half of the equity in the house (this was a pleasant surprise as I essentially had offset the equity with Hannah’s retirement assets).
- The personal property was split per my recommendation.
- When we locate the CD and Life Insurance policy, they are to be awarded to Hannah. We have the name of the bank and the relevant information showing where the interest was deposited into Dirk’s account. We also have policy numbers for the life insurance and the name of the company.
My takeaway was a reminder that Judge’s look to financial experts that can cull through the documents and provide them with clear and compelling reports that allow them to make informed decisions. When you utilize sound methodology and can substantiate your reports with the appropriate documents you can make a compelling case and have the numbers tell the story. I believe that in this case the judge also saw that Dirk was less than honest about the money and ruled accordingly. I suspect the additional home equity award was a punitive award based on Dirk’s dishonesty.
The truth will never hurt as much as the exposure of a lie.
Photo compliments of Paul Nolette