Hiding Assets in a Michigan Divorce: How They Get Found

If you have started to wonder whether your spouse is telling the whole truth about money, that is a question Michigan divorce procedure is built to answer. Maybe the business that supported a comfortable life suddenly reports almost no profit, or the bonus that showed up every February stopped being mentioned.

Michigan Already Requires You Both to Open the Books

You do not have to go to war to get basic financial information. MCR 3.206(C)(2) requires each party to serve a Verified Financial Information Form — SCAO Form CC 320 — within 28 days after the defendant's initial responsive pleading is served, unless the parties waive it in writing or a settlement agreement or consent judgment has already been signed by both parties.

The form is detailed. It covers income, real estate, vehicles, pensions, debts, safe deposit boxes, and any claim that property is separate rather than marital. It calls for your four most recent paycheck stubs or an employer wage statement, your last federal and state tax returns including all schedules, and three years of business returns if you are self-employed.

One feature is worth understanding. For bank, retirement and investment accounts, the form asks for two numbers: the current balance, and the balance 90 days before that. That lookback runs from whatever date the filer uses, not from the filing date — so it can surface recent movement but will not necessarily reach a transfer made months earlier. Comparing the reported figures against actual statements closes that gap. MCR 3.206(C)(5) adds a continuing duty to correct a form you learn was materially incomplete.

What a Forensic Review Actually Looks At

Concealment does not have to be elaborate to matter. It can look like a bonus postponed until after the judgment enters, a business that suddenly underperforms with personal spending run through it, an unlisted 401(k) or cryptocurrency wallet, or a transfer to a relative described as repayment of an undocumented loan. Finding it is less dramatic than “forensic accounting” sounds: it is disciplined comparison of documents that should agree with each other.

The tax return is a natural starting point. Schedule E reports rental and pass-through income, and a Schedule K-1 identifies an ownership or beneficial interest in a partnership, estate or trust. Schedule B reports interest and ordinary dividends, though it is only required above a dollar threshold — so its absence proves nothing, while its presence can point to an account that never made it onto the disclosure form. Loan applications are another pressure point: a spouse who described their assets one way to a bank and another way to the court has a problem with one of those statements.

From there the work is reconciliation — deposits against reported revenue, lifestyle against reported income, reported balances against actual statements. When the documents a spouse controls aren't enough, discovery reaches the ones they don't, through subpoenas to banks, employers and lenders.

Transfers to Friends and Family Have Their Own Statute

If money or property was moved to a third party, Michigan's Uniform Voidable Transactions Act, MCL 566.31 to 566.45, can be relevant. MCL 566.34(1)(a) addresses a transfer made with actual intent to hinder, delay or defraud a creditor, and MCL 566.34(2) lists factors a court may consider among others — including whether the transfer was to an insider, whether the transferring party kept control of the property afterward, and whether assets were concealed.

Dissipation during the case is handled inside the divorce itself. In Woodington v Shokoohi, 288 Mich App 352, 368; 792 NW2d 63 (2010), the Court of Appeals stated that where a party has dissipated marital assets without the fault of the other spouse, the value of the dissipated assets may be included in the marital estate. It remanded for adequate findings, faulting the trial court for explaining neither its treatment of the accounts at issue — including $100,000 moved out of a joint credit union account the month the case was filed — nor its overall plan for dividing the estate.

What a Judge Can Actually Do About It

There are two sets of consequences. Discovery sanctions come first. Under MCR 2.313(B)(2), a court faced with a party who disobeys a discovery order may take matters as established against that party, bar them from supporting or opposing designated claims or defenses, strike pleadings, dismiss, enter a default judgment, or treat the failure as contempt. It may also require that party to pay the reasonable expenses and attorney fees caused by the failure, unless the court finds the failure was substantially justified or that other circumstances make an award unjust. MCR 3.206(D)(2)(b) separately allows a fee request where a party refused to comply with a previous order despite being able to.

Then there is the property division itself — and here a common claim needs correcting. You may have read that a Michigan spouse who hides assets automatically forfeits them. That is not what the Supreme Court held. In Sands v Sands, 442 Mich 30; 497 NW2d 493 (1993), the Court of Appeals appeared to adopt a rule along those lines; the Supreme Court affirmed the result in that case while expressly declining to adopt automatic forfeiture. It said the circuit court must make an equitable division on the facts proven in each case, that concealment is a relevant consideration but only one of many facts the court must weigh, and that a judge's role is to achieve equity rather than to punish a party.

That cuts both ways. Concealment can matter a great deal — it bears on the “past relations and conduct of the parties” factor recited in Sparks v Sparks, 440 Mich 141; 485 NW2d 893 (1992), and it can damage the concealing party's credibility on other issues. But no one should expect a windfall as an automatic matter of law.

If the Judgment Is Already Signed

Finding out afterward is harder, and the deadline is unforgiving. MCR 2.612(C)(1)(c) allows relief from a judgment for fraud — intrinsic or extrinsic — misrepresentation, or other misconduct of an adverse party. But MCR 2.612(C)(2) requires that motion to be made within a reasonable time and, for that ground, within one year after the judgment was entered. That clock runs from entry, not from the day you discovered the problem.

One opening survives it: MCR 2.612(C)(3) preserves a court's power to entertain an independent action and to set aside a judgment for fraud on the court — a narrower and more demanding path than a timely motion.

What this means for you

If the numbers in your case don't look right, the question worth asking early is what the record will show — not what you can confront your spouse with.

• The documents matter more than the argument. Tax returns, account statements and loan applications are where a discrepancy becomes demonstrable.

• The CC 320 is a sworn document, so it is worth reading closely when it arrives.

• Timing matters. The tools available while the case is open are broader than the one-year window after a judgment enters.

• Do not access accounts, devices or email you have no right to. Evidence obtained improperly can create separate legal exposure and may damage your position.

  
  

Whether a forensic accountant is worth retaining depends on the size and complexity of the estate — a W-2 household presents a different problem than a closely held business.

If you are concerned that the financial picture in your divorce is incomplete, Scozzari Law, PLLC can review your situation and talk through the discovery options in your case. Call to arrange a consultation about the facts you are dealing with.

This article is general information about Michigan law and is not legal advice. Reading it does not create an attorney-client relationship with Scozzari Law, PLLC. Michigan law changes, and how it applies depends entirely on the facts of your case. If you have a family law or criminal matter in Kent County or elsewhere in Michigan, contact us at (616) 226-4343 or james.scozzari@scozzarilaw.com