Accurate and up-to-date financial disclosure is an essential element of the divorce process. Whether making or responding to a claim for equalization, the parties involved have to reveal any and all sources of income, as well as their expenses.
The standard form financial statement lists eleven sources of income. Just fill in the blanks. Simple, right? But what happens when a party in a proceeding accrues wealth from a source of income not explicitly listed on the form?
Historically, things like stamp, coin, or card collections come to mind when we are thinking about obscure income sources, but times have changed. In the age of the internet, divorce lawyers like me have to be aware of online gaming accounts and how neglecting their existence may lead to an inaccurate depiction of one’s net family property.
Filling out financial documentation encompasses a review of an individual’s tax returns and notices of assessment, among other things. The necessary documents will reflect money earned via gambling only if the Minister of National Revenue deems it was sufficiently organized so as to constitute a business, per the definition in the Income Tax Act.
Unfortunately, gambling rarely meets the threshold test and is largely understood to be a windfall gain—lucky and one-time.
I say this is unfortunate because there are situations where gambling should be examined more closely. There are situations where it can be used to hide or deplete funds that would otherwise be found in the day-to-day banking accounts of couples everywhere.
As the new generation of young adults grows older, some of them will inevitably be facing divorce proceedings in the future. Because online gaming is a relatively new phenomenon, it is not something divorce lawyers have had to address often, but I predict that will change. I can see gambling becoming a hotly contested issue in the future, especially since the Ontario Lottery and Gaming Corporation is planning to follow in the footsteps of their counter-part in British Columbia. This will give the residents of this province easy and secure access to a casino-like atmosphere just about anywhere you can get an internet connection.
In any event, no matter where the servers of the websites are situated, the existence of the money is what must be ascertained. Like Carl Bernstein and Bob Woodward who unearthed the Watergate Scandal that lead to the resignation of the US president, I too must “follow the money.”
How can the source of gambling be identified? And how can it be evaluated in a precise fashion?
If you are in a situation where you believe your soon-to-be ex-spouse participates in online wagering of any kind, whether it involves betting on sporting events or playing online poker, or both, he or she may have a substantial amount of money situated in an online account. There are many reasons why an individual may choose to conceal their gambling, however, if your spouse does not readily admit to his or her participation in such activities, there are ways to find and produce the documentation necessary to ensure the funds are included in the calculation of net family property, thus preserving your right to equalization.
The money deposited into an online gambling account has to have come from somewhere. By analyzing banking and credit card statements there is a good chance you can trace the money used online to a personal or joint account that is a product of the marriage. Our ability to prove this is enhanced by the fact that online gambling accounts often require “economic re-stimulation”– their holders typically make countless deposits and withdrawals. These accounts are busy!
And what about clients who claim to have developed a convenient gambling habit, but there is no paper trail or electronic trail of any kind? Most often, this is merely an attempt to siphon money out of an account and “park” it elsewhere, temporarily. It’s not a real habit; it’s a pretend gambling habit.
As a divorce lawyer, I am here to protect the rights of my clients and that involves staying on top of current issues, and identifying emerging issues before they develop. I anticipate that many clients will walk through the doors of my firm’s office in the future and need advice regarding their spouse’s online gambling habits and accounts.
For the Feldstein Family Law Group, I’m Andrew Feldstein.