How to Deal with Hidden Assets in a Michigan Divorce

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No one wants to feel like they have been cheated during their divorce case. The larger your marital estate, the more you may be worried that your spouse will conceal important assets and prevent you from receiving a fair and equitable property settlement. Here are some suggestions for how to deal with hidden assets during the divorce process and after the judgment is entered.

It Is Never a Good Idea to Hide Assets.

Concealing assets can result in the forfeiture of the concealed assets and costly sanctions. Experienced divorce attorneys know how to locate and document concealed assets. Some assets are not obvious: for example, capital loss carryovers and accounts receivable are assets that do not show up on a listing of bank, investment or retirement accounts. Tax returns are helpful in finding assets, but sometimes, a forensic CPA is needed to insure everything is accounted for. It is a high-asset divorce mistake to rely on an assumption that “no one will figure out” that there are assets the other party is entitled to receive in the equitable division of marital property required in all divorce cases in Michigan. Failing to be forthright about all the assets just ends up costing more attorney fees in the end, at best. If there are particular assets that are especially valuable to one party, it is better to disclose that asset, argue it is not equitable to divide it with the other party, or prioritize it in a proposed settlement out of court.

Common Types of Hidden Assets in Divorce

Some types of property are harder to prove or find than others. Some of the most common types of hidden assets in divorce include:

  • Cash. Because there are no financial records beyond the initial withdrawal, it can be hard to prove if one party maintains large cash reserves prior to or during divorce. And because withdrawal slips do not tell us what happened to the money, we may have difficulty finding out if it still exists. Discovery such as interrogatories and depositions may help, but you may end up throwing good money after bad depending how much cash is at issue.
  • Bank Accounts. If a spouse wants to conceal financial assets, they may transfer financial assets into accounts held by third parties such as their parents, adult children, or business partners. But sometimes these transfers and accounts are bona fide.
  • Real Property and Vehicles. Similar to bank accounts, homes, real property, and vehicles can be transferred into third parties’ names simply by signing a deed or a title transfer. This is quite rare, however.
  • Jewelry or Collectibles. While the existence of collections or jewelry is often not concealed, it is common for the value of those collections to go unproven. Specific pieces can also be handed off to third parties while the divorce is pending, only to return to the concealing party after the Judgment is entered. However, except in rare cases, the actual value for divorce purposes of jewelry and collectibles is a fraction of the amount paid for the items. Again, you may be throwing good money after bad trying to track down that missing ring from your tropical vacation ten years ago.
  • Cryptocurrency. Technically sophisticated parties can sometimes use cryptocurrencies, NFTs, and other intangible accounts to hide the value of their assets. It can be difficult to establish the value of cryptocurrency, since the exchange rates change rapidly. Stopping a spouse from continuing to convert more marital assets during the divorce process to these types of currency is critically important.
  • Debts. Sometimes marital debts are concealed - and if those debts had not been incurred, there would be more assets to divide. Dissipation issues such as gambling and overspending are another issue. Unfortunately, there is not a lot courts can typically do about these issues if they occurred during the marriage, before a divorce case and request for a financial restraining order have been filed.

Signs of Hidden Assets in a Michigan Divorce

How can you know if your spouse is concealing assets that belong within the marital estate? Depending on your family dynamics and the hostility within your relationship, you should inform your divorce attorney if your spouse:

  • Is, or becomes secretive about family finances
  • Removes your access to accounts or online portals
  • Has financial statements sent to their workplace or a third party’s address
  • Opens new accounts in his or her name only, or with a third party
  • Changes their financial passwords and PINs
  • Signs or files tax returns without your knowledge or consent
  • Removes tax returns and other financial documents from the home
  • Uncharacteristically excludes you from important financial decisions such as investment options
  • Significantly increases the withholdings taken out of their income
  • Begins making large withdrawals or transfers following conflict in the home
  • Travels or transfers funds overseas when this is not the status quo
  • Assigns finances or assets to your adult children or a trust for the benefit of your children when this is out of the ordinary

Even if there has been no Complaint for Divorce filed, these warning signs should signal you to begin obtaining copies of your most important financial documents, and contact a high-asset divorce attorney as soon as possible.

How to Find Hidden Assets During Divorce

When concealed assets are an issue in the case, high-asset divorce attorneys have to get to work early in the case to find, document, and prove hidden assets. Reviewing complete tax returns including all schedules and forms is often the first step. You should fully discuss all your financial circumstances with your attorney, including any information you have on your spouse’s activities even as part of your initial consultation. If you and your spouse have not yet separated, locate and copy financial documents, and take pictures of collections, jewelry, and even furniture, which can be used to create an inventory post-separation. Check hiding spaces in the home, such as safes, closets, attics, basements, and storage units may prove to be fruitful. Pay attention to receipts, bank statements, and casino membership cards or letters from casinos prohibiting a party from returning. If you find evidence of hidden assets or undisclosed financial accounts, don’t take the original documents. Instead, make a copy or take a scan of the statement, and provide them to your attorney electronically (photos are often illegible - scans are much better).

A high-asset divorce attorney can use the evidence of hidden assets in a Michigan Divorce to file discovery requests and subpoenas to get more information from your spouse, their attorney, or third parties such as in-state banks, some financial advisors if privilege does not apply, employers, and insurance providers. You don’t have to depend on your spouse’s honesty, nor do you have to spend lots of money chasing the pot of gold at the end of the rainbow. Even if your spouse tries to bury the evidence of their hidden assets in piles of bank records, your attorney can hire a financial accountant to trace deposits, withdrawals, and transfers to locate missing assets and demonstrate your spouse’s nefarious conduct. At trial, your financial expert can testify to establish the true value of the marital estate, and your attorney can argue that your spouse is at fault for the removal of those assets to ensure you receive a fair outcome. Again, however, depending on the amount of money involved, it may cost you more to discover and prove the hidden assets, there are never any guarantees a judge will agree the conduct merits any recourse, and sometimes, a party who overspent has little or no means to obtain money to satisfy a court order requiring them to reimburse you. Be judicious when deciding whether it is worth digging into, and pursuing, a claim of hidden assets or overspending - your divorce lawyer can help you weigh the pros and cons.

What to Do About Hidden Assets Found After Divorce

Sometimes, ex-spouses don’t discover hidden assets until after the Judgment of Divorce has been entered. For example, you may learn that funds had been removed from your spouse’s retirement accounts in preparing a qualified domestic relations order (QDRO) to transfer the assets post-divorce. Michigan law allows you to go back to court and file a motion for relief from judgment, demonstrating that the Judgment was entered based on your spouse’s fraud or misrepresentations related to the size of the marital estate. The Michigan Supreme Court has said that in those cases, the spouse who has hidden assets may be sanctioned and the assets can be divided after the fact. There are even cases to support the claim that your spouse forfeited any interest in the concealed assets by lying to the court.

The Importance of Demonstrating the Marital Estate at Trial

Michigan trial court judges work every day to provide divorcing spouses with a fair and equitable division of the parties’ combined marital estate. But they can only make decisions about assets they know about, and which the parties demonstrate exist at trial. Divorce attorneys spend a lot of time and effort compiling documents, preparing testimony, and even hiring expert witnesses to demonstrate the scope and value of the marital estate when the case goes to trial.

Get Help Proving Hidden Assets with a High-Asset Divorce Lawyer

If you have any concerns about your spouse concealing assets, or the value of properties, you should work with a divorce attorney familiar with high-asset cases and complex financial situations to ensure everything is accounted for.

At Nichols, Sacs, Slank, Sendelbach, Buiteweg & Solomon, PC, we know how important it is to deal with hidden assets in divorce. Our Ann Arbor high-asset divorce attorneys can help you locate, document, value, and prove the existence of concealed assets, to ensure you receive a fair division of your full marital estate. Call 724-994-3000 or click here to schedule a consultation with one of our experienced attorneys.

Categories: High Asset Divorces