“Where did you say you put that?”
There are many situations in which one might ask, “How can I tell where a person has placed their financial assets?”
Some that readily come to mind include estate settlements, divorces, business divestitures, split or spin-offs, due diligence for business acquisitions, fraud investigations, IRS investigations or negotiations, or other regulatory investigations or negotiations.
The assets might be real or imagined, larger or smaller than we expect. To the person feeling entitled to a share of the assets, it can be as tough as looking for the proverbial pot of gold at the end of a rainbow.
There are a few good places to start, however.
Let’s look at some cash and cash equivalents. If another party doesn’t want you to notice their cash or cash equivalents (items readily convertible to cash), there are some pretty clever ways to conceal them. For example, a person might intentionally overpay credit card bills by a significant amount, creating a source for refunds and/or a funding source for purchases. If you send MasterCard or Visa $10,000 more than you owe, they will gladly accept it.
Or how about your old buddies, the IRS? If you send them $10,000 or $20,000 too much, they will be glad to accept it, hold it and not pay you interest. Later you could get it refunded or use it to pay taxes due in the future.
There is another kind of cash equivalent that is a bit more esoteric. This is “income tax loss carryovers.” Capital-loss carryovers are a good example. These can be carried forward for up to five years, offsetting the taxes that would be due on capital gains realized in that five years. If you had $66,666 in capital-loss carryovers to offset anticipated capital gains in the next five years, there will be another $10,000 in your pocket.
In another example, if you or your business have old operating losses that can be carried forward up to 20 years and realistically expect future profits, those loss carryovers would constitute cash equivalents.
Now comes the question as to what types of documents we might look at to uncover these reserves of cash and cash equivalents.
A good place to begin is the bank statement for savings and checking accounts. Look at the individual deposits and identify the nature and source of those deposits. Perhaps the deposits came from other unknown accounts, income sources you might not have been aware of or gift and inheritances.