Uncovering Financial Infidelity with a Forensic Accountant and Brandi Glanville's Real Story
In this episode of Money Rehab with Nicole Lapin, the topic of financial infidelity is explored. The discussion centers on tactics used to conceal assets during divorce proceedings, such as sudden income or asset deficiency, intentional impoverishment, and suspicious changes in financial habits.
Forensic accountant Cheryl Hynes explains the role of experts in tracing money trails, uncovering discrepancies, and identifying red flags indicative of financial infidelity. Glanville shares her personal experience with asset concealment, while Lapin offers protection strategies like prenuptial and postnuptial agreements as well as the potential value of hiring forensic accountants.
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1-Page Summary
Defining financial infidelity and common tactics used to conceal assets
Financial infidelity involves one spouse significantly and harmfully lying about money, especially during a divorce, as Cheryl Hynes explains. It's called "divorce planning" when spouses restructure finances to conceal wealth from their soon-to-be ex.
Tactics used include "sudden income deficiency syndrome (SIDS)" and "sudden asset deficiency syndrome (SADS)," as well as "intentional impoverishment," where individuals appear less wealthy than they really are to avoid sharing assets during divorce, according to Hynes. Brandi Glanville shares her personal experience of naively signing away assets prior to her ex-husband filing for divorce.
Red flags for financial infidelity, per Hynes, include a spouse unwilling to share financial info, claiming the situation is too "complicated" to explain, or making unexplained changes to accounts and habits.
The role of forensic accountants in uncovering financial infidelity
Forensic accountants, like Cheryl Hynes, specialize in tracing money and asset trails. During a divorce, they investigate suspicions of financial infidelity by scrutinizing timing of marital issues and subsequent asset movements.
They examine discrepancies between reported incomes and true finances across documents like loan applications and tax returns. Forensic accountants also flag sudden deviations from norms, like shifts from direct deposit to checks, increased tax withholding, and suspicious business deals. In extreme cases, some spouses have even hired hitmen to deter investigations.
Strategies for protecting oneself financially in a divorce
Nicole Lapin and Brandi Glanville discuss protection strategies like prenuptial and postnuptial agreements that set clear financial terms, including provisions for hiring forensic accountants when needed, with costs covered by the party engaging in infidelity.
While costly at $300-$500 per hour on average, forensic accountants can be worthwhile investments to uncover concealed assets. But even without findings, as Glanville experienced, their involvement alone can deter spouses from hiding money in the first place.
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Counterarguments
- While forensic accountants can be effective in uncovering hidden assets, their services are expensive and may not be financially feasible for everyone going through a divorce.
- The effectiveness of prenuptial and postnuptial agreements can vary depending on the jurisdiction and the specific circumstances of the divorce, and they may not always provide the protection expected.
- The tactics mentioned, such as SIDS and SADS, may not always be indicative of financial infidelity; they could also result from legitimate financial difficulties or poor financial management.
- The assumption that the involvement of forensic accountants can deter spouses from hiding money might not hold true for all individuals, as some may be determined to conceal assets regardless of potential consequences.
- The idea that some spouses have hired hitmen to deter investigations is an extreme case and not representative of typical divorce proceedings; it could be seen as sensationalizing the issue.
- The text implies that financial infidelity is a common issue in divorces, which may not be the case for all divorcing couples, as many separate their finances amicably and transparently.
- The strategies for protecting oneself financially in a divorce, such as hiring forensic accountants, may not be accessible to individuals with lower incomes, potentially creating a disparity in who can effectively uncover financial infidelity.
- The focus on forensic accountants might overshadow other less costly and more accessible methods of financial protection during divorce, such as mediation or collaborative divorce processes.
Actionables
- You can create a personal financial transparency pact with your spouse to foster open communication about money, where both parties agree to regular financial check-ins and full disclosure of assets and incomes.
- This pact would involve setting up monthly meetings to review bank statements, credit card statements, and any other financial documents together. By doing this, you both become familiar with your financial situation, making it harder for either party to hide assets or income. It's like having a buddy system for your finances, where accountability and transparency are the main goals.
- Develop a habit of documenting and organizing all financial transactions and asset acquisitions in a secure, shared space accessible to both partners.
- This could involve using a shared cloud storage service where you upload receipts, investment statements, and property titles. By keeping a digital paper trail, you create a mutual understanding of your financial landscape. Think of it as a shared financial diary that helps both of you stay on the same page and can serve as a reference point if there are ever any discrepancies or concerns.
- Engage in educational activities together that focus on financial literacy and the legal aspects of finances in marriage, such as attending workshops or online courses.
- This proactive approach not only strengthens your understanding of finances but also builds a common foundation of knowledge between you and your spouse. For example, you could enroll in a free online course about family finances or attend a local seminar on prenuptial and postnuptial agreements. It's like going to the gym for your financial health, where both of you work out your money muscles together.
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Defining financial infidelity and common tactics used to conceal assets
Cheryl Hynes, Brandi Glanville, and Nicole Lapin explore the concept of financial infidelity, especially during divorce proceedings, detailing common tactics used to conceal assets and the red flags that may indicate such deception.
Financial infidelity involves one spouse lying to the other about money in a significant and harmful way, particularly during a divorce.
Financial infidelity happens when one spouse lies to another spouse about money in a significant and/or harmful way, which can be particularly damaging during a divorce when assets are being divided. Cheryl Hynes explains that "divorce planning" is the act of restructuring finances in a way to hide actual wealth during divorce proceedings. Nicole Lapin notes that "divorce planning" involves pre-divorce maneuvers where money is strategically moved and advises awareness when there are suspicions of such behavior.
Brandi Glanville shares her personal experience, highlighting the naivety she had during her marriage, where she trusted her husband and signed everything presented to her, including signing her name off their house just six months before he filed for divorce. Glanville also suggests that engaging in a preconceived plan to protect oneself financially in anticipation of a potential divorce can be even more detrimental than a prenuptial agreement.
Spouses may engage in "divorce planning" where they restructure their finances over years to hide assets, often using tactics like sudden income or asset deficiency, intentional impoverishment, and other deceptive practices.
The tactics used during "divorce planning" can include the intentional actions detailed by Hynes, who introduces the terms “sudden income deficiency syndrome (SIDS)” and “sudden asset deficiency syndrome (SADS),” which are related to concealing assets during a divorce. Another term Hynes brings up is "intentional impoverishment," where a party may take actions or inactions that result in less income than usual simply to avoid sharing wealth with a soon-to-be ex-spouse.
Red flags for financial infidelity include a spouse being unwilling to share financial information, claiming the situation is "complicated" and hard to explain, or making un ...
Here’s what you’ll find in our full summary
Defining financial infidelity and common tactics used to conceal assets
Additional Materials
Counterarguments
- While "divorce planning" is often portrayed negatively, it could also be argued that in some cases, individuals may restructure their finances as a protective measure against a spouse who is financially irresponsible or abusive, rather than as a means to deceive.
- The concept of "divorce planning" might be seen as a prudent step for individuals who anticipate a contentious divorce and wish to ensure their financial stability post-divorce, rather than an outright attempt to conceal assets.
- The term "financial infidelity" could be considered too broad or subjective, as what constitutes a significant and harmful lie about money may vary greatly between couples and individual perceptions.
- The tactics described as red flags for financial infidelity, such as a spouse claiming the financial situation is "complicated," could sometimes be genuine expressions of the complexity of financial matters rather than attempts at deception.
- The involvement of a forensic accountant, while valuable in uncovering deception, could also be seen as an escalation that may increase distrust and conflict in a divorce situation, potentially leading to a more adversarial and ...
Actionables
- You can create a personal financial transparency pact with your spouse to foster open communication about money. Set up regular "financial date nights" where you both review account statements, discuss financial goals, and update each other on any changes in income or expenses. This habit can help prevent financial infidelity by establishing a norm of transparency and mutual understanding.
- Develop a habit of documenting your financial assets and accounts independently. Use a secure digital tool or app designed for financial record-keeping to track your assets, liabilities, and account changes over time. This record can serve as a personal reference in case you ever need to verify financial information or notice discrepancies that could signal hidden activities.
- Engage in educational games or simulations with your spouse that involve financia ...
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The role of forensic accountants in uncovering financial infidelity
Forensic accountants possess specialized skills in tracing money and asset trails and play a critical role when financial infidelity is suspected during a divorce.
Forensic accountants specialize in tracing money and asset trails and can be hired during a divorce to investigate suspicions of financial infidelity. Cheryl Hynes, an expert in the field, details how these professionals operate, looking for the timing of when things in the marriage began to sour and using that as a starting point to look for moved or hidden assets. These accountants can be instrumental in alerting attorneys to intentional impoverishment, suggesting that a vocational expert might be necessary to determine a spouse's actual income potential.
They look for discrepancies between a spouse's stated income/net worth and their actual financial situation, such as differences between loan applications, tax returns, and divorce disclosures. Forensic accountants thoroughly examine financial documents where an individual has reported income for purposes unrelated to divorce—like loan applications—to uncover any discrepancies in reported income or business valuations.
Forensic accountants can also flag sudden changes in financial habits and structures that may indicate an attempt to conceal assets. These red flags can include shifts from direct deposit to checks, increases in tax withholding, and suspicious business transactions. Such changes in a spouse’s financial activity could sugges ...
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The role of forensic accountants in uncovering financial infidelity
Additional Materials
Counterarguments
- While forensic accountants are skilled in uncovering financial discrepancies, their involvement can significantly increase the cost of divorce proceedings, potentially making it less accessible for individuals with limited financial resources.
- The effectiveness of a forensic accountant can be limited by the quality and completeness of the financial records available; if a spouse has been very careful or sophisticated in hiding assets, even a forensic accountant may not be able to uncover the full extent of financial infidelity.
- The use of forensic accountants may not always lead to a fair and transparent outcome if the legal system or the parties involved do not adequately address the findings.
- There is a risk that the involvement of forensic accountants could escalate hostilities in an already contentious divorce, which might not be in the best interest of any children involved or the emotional well-being of the parties.
- Forensic accountants, whi ...
Actionables
- You can create a personal financial transparency plan by setting up a shared document with your partner where both of you regularly update your income, expenses, and savings. This habit not only promotes honesty but also prepares you for a clear financial understanding in any situation, mirroring the thoroughness of a forensic accountant.
- Develop a habit of reviewing your financial statements monthly, looking for any inconsistencies or unusual transactions. This practice will sharpen your attention to detail and help you recognize patterns that could indicate errors or intentional misreporting, akin to the skills used by forensic accountants to spot red flags.
- Engage in a financ ...
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Strategies for protecting oneself financially in a divorce, such as prenups and hiring forensic accountants
Nicole Lapin and Brandi Glanville discuss strategies to protect oneself financially in the event of a divorce, focusing on the roles of prenuptial agreements and forensic accountants.
Prenups and postnups can help establish clear financial terms in the event of a divorce, including provisions for hiring and paying for a forensic accountant if needed.
Lapin acknowledges the importance of prenuptial and postnuptial agreements, suggesting these legal documents can set clear financial boundaries and expectations for a marriage. Glanville shares her own story, confirming her support for both prenups and postnups. In her experience, not having such an agreement left her financially vulnerable post-divorce, highlighting the importance of preemptively setting terms to avoid such situations.
These agreements can specify that the spouse engaging in financial infidelity will be responsible for the costs of the forensic accounting investigation.
One key provision that can be included in these agreements is that, in the case of financial infidelity, the spouse responsible can be held accountable for the costs associated with a forensic accounting investigation. This not only offers protection but also serves as a deterrent against hiding assets.
Hiring a forensic accountant, though costly at $300-$500 per hour on average, can be a worthwhile investment to uncover hidden assets and protect one's financial interests during a divorce.
Glanville explains the value of hiring a forensic accountant, despite the high costs, which she personally e ...
Here’s what you’ll find in our full summary
Strategies for protecting oneself financially in a divorce, such as prenups and hiring forensic accountants
Additional Materials
Counterarguments
- Prenups and postnups may not cover all unforeseen financial issues that arise during a marriage or divorce.
- Prenups can sometimes create a sense of mistrust between partners before marriage.
- The effectiveness of prenups can vary depending on the jurisdiction and how well they are drafted.
- Not everyone has access to the resources needed to draft a comprehensive prenup or postnup.
- Forensic accountants may not always be able to uncover hidden assets, especially if sophisticated methods of concealment are used.
- The cost of hiring a forensic accountant may not be justifiable, especially if there is little to no evidence of financial infidelity or hidden assets.
- The involvement of forensic accountants can sometimes escalate conflict and mistrust ...
Actionables
- You can create a "financial transparency agreement" with your partner to foster open communication about finances, which can serve as a precursor to a prenup or postnup. This agreement would involve setting regular "finance dates" to review bank statements, investments, and debts together, ensuring both parties are fully informed and engaged in their financial health and habits.
- Consider taking an online course in personal finance management to understand the principles that underpin prenups and postnups. This knowledge will empower you to make informed decisions about your own financial boundaries and the necessity of legal agreements in your relationship.
- Start a savings plan speci ...
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