Commentary: Locating hidden assets

By Marie E. Matyjaszek

When a divorce action is filed, suspicions of a spouse’s deceit rack up faster than Lindsay Lohan’s probation violations. 

Don’t believe that your wife’s incessant shredding of documents unequivocally means she is hiding loot—I shred my bank statements every few years so I don’t  end up on the TLC show “Hoarders.” 

But, if you haven’t been in control of the finances, or you’ve been kept in the dark about major decisions, it doesn’t hurt to look into it.

To be honest, your wife has always been sneaky—it took you a good five years to find her hidden stash of designer shoes, and you haven’t ever been able to locate those really nice cufflinks from your ex-girlfriend once she found out who they were from. 

So, as you go through the discovery process during your divorce, it’s not that surprising that several of your bank accounts are missing substantial deposits. 

You tell your lawyer that she obviously hid the money in an attempt to remove it from the marital estate.  Your attorney issues subpoenas and conducts depositions like it’s his job (oh wait, it is), but you just can’t get the definitive proof you need, so you reach a settlement and enter the judgment. 

Luckily for you, your new girlfriend has a love of all things Neiman Marcus and wants nothing more than to help you find the money.  She hires the best PI and finally locates your ex-wife’s divorce cash stash. 

Vindicated, you walk around with that “I told you so” expression on your face for weeks.  What can the court do now that you’re divorced?

The preeminent case with respect to hidden assets is undoubtedly Sands v. Sands, 192 Mich App 698 (1992), aff’d, 442 Mich 30 (1993). 

Sands provides the courts with the ability to award all of the hidden asset to the aggrieved party, and none to the party who concealed it.  It is important to realize that this forfeiture is not automatic, but it can be warranted in cases if it provides an equitable division of the marital property under the circumstances. 

Sands’ holding should make a shifty spouse think twice before throwing a blanket over her secret divorce cash stash.

If your wife dumped money into an account owned by her and her close best friend (think Oprah and Gayle), and the court finds that her BFF acted in concert with her to hide it, Gayle’s account could be divided even though neither of the spouse’s names are on the account.

Settlement agreements that are incorporated, but not merged, into your judgment of divorce provide you with another recourse—contract law. 

Pursuant to Grace v. Grace, 253 Mich App 357 (2002), the aggrieved spouse can sue his or her ex (also known as Mr. or Mrs. “Money?  What money?”) civilly for fraud, which is separate from the divorce action. 

The civil action also comes along with a side order of the right to a jury trial, not to mention a little more cha-ching in the form of statutory interest. 

However, if the judgment of divorce merges the property settlement agreement, the only recourse for your post-judgment fraud woes is MCR 2.612.  Note that this court rule requires you to file your motion for relief within one year of entry of judgment.

It’s amazing how quickly trust disintegrates between spouses when a divorce is filed, and we attorneys hear a lot of “I should have had control of the checkbook” and “Why didn’t I go to the investment meetings too?” 

A good attorney will tell you that hindsight is 20/20, but a great attorney will tell you to stop looking for the cufflinks.

Marie E. Matyjaszek is an associate attorney at the Law Office of Robert Matyjaszek PLLC in Jackson, Mich.  Her blogsite is: http://www.re-ciprocity.blogspot.com.  She can be reached at (517) 787-0351 or by e-mailing her at  matyjasz@hotmail.com.

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