Something feels off, but you can’t always prove it right away. Maybe it’s missing statements. Maybe it’s financial information that suddenly becomes “off limits.” Or maybe it’s just a gut feeling that something doesn’t add up. In divorce cases, that feeling is often where the real issue starts. Hiding assets in a divorce isn’t always obvious, but it does happen. And when it does, it can directly affect how property is divided under Michigan law. There are ways to uncover what’s being hidden, but knowing what you’re looking at is where it starts.
No, it’s not legal to hide or conceal assets during a divorce. Michigan’s family laws require full financial disclosure. Family courts expect individuals to be transparent and honest during the discovery phase. There are also required sworn financial statements that each person attests to being truthful about.
There's a difference between taking a strategic legal position and committing fraud. A spouse may legitimately argue that certain property isn't marital property or dispute how much an asset is worth.
It's normal for spouses to disagree about what property should be divided or how much an asset is worth. What the law does not permit is intentionally concealing assets or income to keep them out of the property division process.
There are several warning signs that could signal a spouse is attempting to conceal some of their assets. There may be a sudden change in financial behavior. While opening a new account is normal, opening several new accounts could be potentially problematic without a legitimate reason. Spending patterns may change as spouses navigate life separately. However, changing spending habits unrelated to this could be a sign of questionable behavior. This is often seen in lifestyle inconsistencies. Their claimed income doesn’t match their spending habits.
Missing documents in a financial statement are a sign of potential concealment. It could have been an honest mistake. Depending on the situation, it could also be an intentional attempt to conceal financial assets. It could be a bad sign if several crucial documents are missing, such as tax returns, pay stubs, and bank statements.
Business owners could attempt to undervalue their company. This could involve underreporting income, delaying payment collection, or increasing expense reporting. They may create nonexistent employees to increase payroll costs. They could overpay taxes in the current tax year with the intention of receiving a larger refund next year.
Other common actions include making a large or high-value purchase, such as artwork, jewelry, or collectibles. Then, they underreport their value. A spouse may initiate large transfers to family or friends. Then, they claim to be paying back a debt.
When a divorce involves complex finances or suspected hidden assets, an attorney may recommend working with a forensic accountant. These professionals specialize in following financial trails, identifying unexplained transfers, locating undisclosed accounts, and determining whether income or assets have been intentionally undervalued. Their analysis can be especially valuable when one spouse owns a business or has multiple income sources.
The discovery phase is when evidence is found during a legal case. In a divorce case, this is when assets and financial accounts are considered. Both sides can make formal requests for information from the other. However, the system relies on both parties being transparent. When this doesn’t happen, it requires additional legal steps.
Each party can make a formal request for the other party to answer written questions. The answers they give are written and considered under oath. This is an opportunity to ask about bank accounts, assets, debts, business interests, income sources, and recent financial transactions. Unlike an informal request, interrogatories come with serious legal consequences because they would be considered perjury while under oath.
Sometimes, the best method for uncovering hidden assets is to talk to the spouse. A deposition creates the opposite. It’s a formal interview where the person being questioned is under oath. Lawyers use depositions to ask questions and find inconsistencies. A deposition can be short, lasting less than an hour. They can also be incredibly in-depth, lasting all day.
What makes depositions so useful is that they aren’t limited to spouses. Anyone related to the situation who would have knowledge of the marital assets can be brought in for a deposition. This includes business partners, accountants, and financial advisors.
Each spouse can issue a request for production to see documents for accounts in the other spouse’s name. This typically includes bank statements, tax returns, pay stubs, and retirement account statements. The documents requested will depend on the couple’s financial situation. For example, loan applications, approvals, and property ownership records could be requested.
Individuals caught lying under oath can face harsh legal consequences for nondisclosure or fraud. Depending on the situation, they could be held in contempt of court or be ordered to pay monetary sanctions. There could be an unequal property division that favors the honest spouse. In extreme cases, the court could agree to reopen the divorce judgment.
While it may be tempting, do not confront your spouse about your suspicions directly. Instead, let your legal counsel address the situation through the legal process. Gather and preserve as much financial documentation as possible. Do not take any “investigative” action that would be considered illegal to obtain the information. Make notes of suspicious transactions or identified inconsistencies. Bring your suspicions to your attorney. Your lawyer will be able to assist with establishing a legally documented timeline and obtaining supporting information.
Dividing assets in a divorce is supposed to be a straightforward process of disclosure and fairness, but that balance breaks down quickly when one spouse is hiding assets in a divorce. What’s not disclosed can end up shaping the entire outcome of your case. The Law Offices of Kevin R. Lynch P.L.C. works with individuals facing contested and high-conflict divorce issues, including situations involving financial concealment. If something about your spouse’s finances doesn’t add up, it’s worth getting legal advice before the situation escalates.
Contact the Law Offices of Kevin R. Lynch P.L.C. to discuss your case and next steps.
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