Why Hiding Assets in Divorce is Not Worth the Risk

Michigan is a no-fault divorce state, which means spouses need not prove wrongdoing of some sort in order to seek legal separation. Although Michigan is not a community property state, the courts do strive to equitably divide assets and debts in divorce. This does not mean that assets will necessarily be divided equally, and factors affecting the decision to end the marriage could play a role in who gets what, but by and large, the courts strive for a “fair and equitable” division.

Of course, some divorcing parties might not agree with the court’s assessment, or they simply may not want to share assets they believe to be their sole property. As a result, divorcing spouses may attempt to hide assets in order to avoid splitting them or their value. This is a very risky undertaking that could have significant penalties. Here’s why it’s not worth the risk.

Michigan Divorce Law

The laws in Michigan regarding division of marital assets may not seem very clear since “fair and equitable” is open to some interpretation, but there’s no mincing words when it comes to hiding assets. It is not allowed – the law is very clear on this point.

Spouses involved in divorce proceedings must disclose all marital assets. Hiding marital property to the detriment of one’s spouse is considered fraud and the courts have the authority to impose significant penalties if such actions are discovered.

Sands vs. Sands

This was the landmark case involving hidden marital assets in a Michigan divorce. The husband in this case attempted to hide marital assets so as not to have to split them with his wife. When the fraud was discovered, the assets were then equitably divided and he was initially required to pay 70% of his wife’s legal fees as a penalty for his “devious and deceptive conduct”.

Subsequently, however, the Court of Appeals altered the circuit court’s ruling to impose even stricter penalties, saying that the trial court abused their discretion in the matter by not taking more significant punitive actions against the husband. He was then forced to forfeit his interest in the property he had attempted to hide, so that the wife was ultimately granted 100% of these assets.

This case set an important precedent in the state of Michigan regarding procedures to follow in the event that spouses are caught attempting to hide assets and defraud the other party in a divorce. While courts must decide on a case-by-case basis how to divide assets when fraud is involved, the Sands vs. Sands ruling (and subsequent rulings) make it clear that this fraudulent behavior will not be tolerated by Michigan courts.

Penalties for Hiding Assets

The penalties associated with hiding marital assets during a divorce vary by case and are up to the discretion of the court. However, it is not unusual for one spouse to be awarded 100% of assets that the other spouse attempts to hide when the duplicity is exposed.

If you are going through a contentious divorce and you suspect your spouse is hiding assets, contact the qualified experts at The Gucciardo Law Firm at 248-723-5190 for needed legal advice and support.