Accepting New Clients Now. Call To Get Started.

  1. Home
  2.  → 
  3. Property Division
  4.  → Dealing with hidden assets in a Michigan divorce

Dealing with hidden assets in a Michigan divorce

On Behalf of | Jan 9, 2024 | Property Division |

Dividing assets is usually one of the most stressful issues in any divorce. The parties to a divorce often give in to their less honest instincts and attempt to hide assets from the other party. In Michigan, as in most states, such behavior is plainly illegal.

The penalties that may be imposed on a person who hides assets from the other party in a divorce can be very severe: the court may charge the party who hid the assets with fraud and order the payment of damages to the other spouse.

Sometimes, the award of damages requires the defrauding spouse to transfer all of the hidden assets to the other (non-defrauding) party. And most judges area willing to award attorneys’ fees to the defrauded party.

Finding hidden assets is expensive

An attorney can initiate a hunt for assets very cheaply by sending a straightforward demand letter to the other party or the party’s attorney. If the other party is dedicated to the idea of hiding assets, the demand letter may not be sufficient. The attorney for the party looking for hidden assets may need to serve discovery requests such as depositions, interrogatories, requests for production of documents, and one or more motions to compel discovery.

Depending upon the amount of assets that are believed to have been hidden, the searching party may wish to hire experts such as forensic accountants and tax experts. These experts are very expensive and can spend a lot of the client’s money very quickly. Before engaging in any hunt for hidden assets, the client and the attorney should set a budget for the search that is coordinated with the amount of money that may be at stake.

An attorney’s ethical responsibility

A lawyer who is representing a party who is contemplating hiding assets should have a heart-to-heart talk with the client to ensure that the client understands that an attorney cannot engage in hiding assets. If the attorney participates in such a scheme, he or she may lose the license to practice law.