Attorneys typically look into known assets when they research or investigate a divorce case for marital assets. These assets may be subpoenaed by your counsel. In a divorce, there may be hidden assets. You might be suspicious that your ex is keeping money hidden. You just aren’t able to work it out. It can be difficult if your partner uses cunning to conceal it without leaving a paper trail. These occurrences do occur, as your attorney is cognizant of these tactics.
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The practice of concealing assets is actually punishable in Michigan. If a spouse purposely and knowingly conceals assets from their spouse, they risk losing their share of the marital property. To get things started and conduct the necessary inquiry, you simply need to advise your attorney in the right direction.
Common Reasons for Hiding Marital Assets
In a divorce settlement, the state of Michigan requires a fair and equitable division of property, which includes equally sharing all marital assets and obligations. The court will take into account a number of variables when deciding how to divide property in a fair and equitable manner, therefore this does not necessarily imply that everything is equal.
Nevertheless, it’s not unheard of for one or both parties to a divorce to make an effort to conceal assets in order to avoid having to divide them with a spouse.
You may wonder what drives this behavior to conceal assets. Let’s look at some of these reasons.
Entitlement
A spouse may feel they deserve more of the marital assets because they are the breadwinner working for the whole family and the other spouse is just a stay-at-home parent not contributing to income. The other spouse may also feel entitled considering the sacrifice of suspending a career and other opportunities to take care of spouse and children.
Resentment
A spouse in pain for being emotionally or physically abused. These are issues emanating from an abusive spouse, criminal activity in the family or substance abuse disorder in the household. It could be a way for getting back at the spouse for filing the divorce. If you want to see the worst version of your spouse when he or she is resentful, try to read our articles, “What Is Malicious Mother Syndrome In Michigan?” and “How To Deal With A Vindictive Spouse During Divorce In Michigan” to get a glimpse of how low or extreme your spouse may go when they carry that pain of separation.
Desire for financial security
A spouse is strongly motivated or anxious about their future or their financial security and would like to make sure they have some resources to live on after the divorce. The spouse may be worried about providing for the children and is ensuring some assets are protected for the sake of the children. Yes, it may be unfounded because eventually the court does provide and consider this during the property division. It still does not dispel this fear and anxiousness.
The classic garden variety greed
The spouse may just have it in his or her nature to be greedy. They just can’t help themselves. They may have been greedy for most of their married life and this greed may actually have made the other spouse realize they had enough of it. Greed is already a reason by itself to hoard and hide marital assets from the spouse.
Making decisions based on such flawed reasoning is frowned upon by the Michigan courts. It is very obvious from the law that the split of assets must be fair and equitable. All marital assets must therefore be disclosed to the court by both parties.
Common Ways To Hide Assets
People may utilize a number of techniques to hide assets they do not want to share with their spouse. Let’s look at the many ways they will do it.
Converting and moving assets to cash
If you have assets that are not fully documented but have a high market value, your spouse might find a way to sell it to get cash. It can be small assets but has stayed hidden for a while and commands a high present value. Once it’s converted to cash, your spouse can buy things you might not be able to trace.
Converting cash into high value portable assets
Cash is fluid and easy to spend on. It is also difficult to hide. Your spouse can hide it by purchasing high value but portable items like jewelry, art or some form of collectibles. items that gain value through time.
Incurring or creating debt
It is very easy to sign a document stating you owe someone money. A spouse might use this ploy to make it appear he or she has a lot of liabilities. Liabilities or debt will make it appear the net worth of the marriage is lower than it actually is.
Delaying release and receipt of compensation
It is not uncommon for an employee to request an employer to defer the release of compensation. The employer will gladly agree to do so. Your spouse might delay the release of compensation and time it right after the divorce is concluded.
Relying on your trust
Your spouse may not be telling you the value of certain assets or business and relying on the “trust” you have on what your spouse is declaring. We suggest you verify even if you do trust your spouse’s declarations.
Restricting access to financial records or ownership documents
You will suddenly find it difficult to get records of ownership, titles to assets or are confronted by an irritated or angry spouse when you ask about them. If you haven’t noticed, your bank statements and credit card statements are no longer arriving in your home mailbox.
You can engage with your lawyer to learn more about your marital assets through the discovery process if you’re concerned that your spouse may have hidden money or property. In order to examine these documents, spot any unlawful behavior on the part of your spouse, and make sure that all of your marital assets are fairly appraised and distributed, you might also want to engage with a forensic accountant.
Common Approaches to Discovery of Assets
The discovery procedure is used by parties in a civil lawsuit or criminal case to obtain information from other parties, and the same guidelines are applicable in a Michigan divorce case when you’re looking to learn about any assets your spouse might be concealing. The two types of discovery procedures are as follows.
Written Discovery
You can retrieve the paperwork when you request handover of papers, including electronic records, by using:
Interrogatories: Written inquiries sent to your spouse as part of this sort of discovery, and they must be replied within a certain length of time. Interrogatories are useful for gathering information since your lawyer can use them to inquire about the existence and location of assets. There are repercussions for lying because the answers are given under oath and under penalty of perjury.
Requests for Product of Documents: You can use Requests for Production of Paperwork when you need the actual documents pertaining to the assets your spouse might be hiding. Bank statements, tax records, deeds to real estate, or vehicle titles are a few types of documents you may ask for in order to uncover concealed assets.
Issuance of Subpoenas: You can directly contact a bank, employer, or other organization that is in possession of the sought documents when you need the real documents by sending a request or subpoena.
Depositions
A deposition is a question-and-answer session where your attorney questions your spouse about the assets you own, whether they are marital or separate property. Depositions are made in front of a court reporter who records the proceedings on audio and writes it all down. Your husband takes the witness stand and is sworn in at the start of the deposition. False statements carry severe consequences and are considered perjury in legal terms.
Here are some other tips you can use outside the usual process of discovery your attorney may practice.
[a] Look for surges in expenses. If there’s a sudden rise in expenses, check the nature of the expenses. Income and cash flow statements can give you an idea if you are running a business where the cash is being spent on. Check receipts if cash or credit cards are being used. Try to verify if there’ actually cash changing hands for debts suddenly being incurred. Look into purchases of small or portable items carrying unusually high tag prices. You might find that the usual bank and credit card statements are no longer coming into the mail.
[b] Verify latest releases of spouse’s compensation. Your spouse might have requested his or her employer to defer the release of compensation so make direct inquiries with your spouse’s employer. Your spouse’s employer may not want the inconvenience of the drama and legal wrangling that comes with a divorce case, and may be all too willing to disclose information about compensation.
[c] Check for transfers of assets. If such transfers are not based on fair market value, there is likelihood no cash was actually changing hands and no real transfer took place except on paper. There is actually a law on fraudulent transfers and such transactions can be undone under that law.
[d] Check income tax filing. One of the best areas to look for proof that an asset might be hidden is in income tax filings. The sections of the 1040 labeled “Income and Wages,” “Interest and Dividends,” and “Retirement Plan Distributions” should be examined first. Schedule A should also be checked for itemized and other deductions. For any international accounts you might not be aware of, check Schedule B. If your spouse is a sole owner, Schedule C will provide you with details on the revenue and costs of the business. Additionally, Schedule E will detail any assets that can generate income, including investments, trusts, and real estate.
The process of discovery carries certain costs. These costs you need to discuss with your attorney since it drives how far and how deep your attorney can go in the process of discovery. It is not easy to dig into hidden assets and to a certain degree it may require forensic accounting to find assets hidden in the complexity and layers of financial documents.
Consequences of Hiding Assets
There are two possible consequences that could occur if it is found that a divorcing party has concealed assets from the court, and neither of them is acceptable. First, the offender may be accused of fraud, which carries a range of potential punishment.
The court’s judgment about the final property division may also be influenced by this discovery. The court might decide to give the non-defrauding spouse a larger sum of money, or it might even give them the entire hidden property. Parties who try to cheat the courts and their spouses by concealing property stand to lose much more than they would have if they had just disclosed the property in the first place.
The attorney needs to be aware of all the assets, liabilities, income, gifts made and received, gifts left in trusts, benefits granted to trusts, and inheritances. It is the lawyer’s responsibility to communicate this information to the opposing party. So, It’s time to have a serious conversation if a customer is trying to hide assets.
Alternatively, if a client refuses to permit an attorney to disclose an asset (such as a mutual fund), the lawyer must discontinue the engagement with the client owing to a breakdown in communication. The lawyer should contact the “ethical experts” once the case has advanced past the discovery and negotiation phases since failing to do so could result in the lawyer losing their right to practice law.
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