Hidden Assets and Financial Infidelity in Divorce
What to Look For and How to Protect Yourself
When the person you trusted most has been hiding money, accounts, or assets throughout your marriage
You’ve noticed something doesn’t add up. Your spouse claims there’s no money for household expenses, yet takes expensive trips. Bank statements go missing. You’re suddenly locked out of financial accounts you once had access to. Or perhaps you’ve simply had a nagging suspicion that your family’s financial picture isn’t what your spouse claims it to be.
Financial infidelity—hiding money, assets, debts, or spending from a spouse—is more common than most people realize. Studies suggest that nearly one in three Americans who have combined finances admit to committing some form of financial deception against their partner. When that marriage ends in divorce, hidden assets become a critical issue that can significantly impact the fairness of your settlement.
For professionals and couples with substantial assets in Michigan, understanding how spouses hide money and what you can do about it isn’t just important—it can mean the difference between receiving your fair share and walking away from assets you never knew existed.
Why Spouses Hide Assets
Before we dive into detection methods, it’s worth understanding the motivations. People hide assets during divorce for several reasons:
Anticipated Divorce: Some spouses begin concealing assets months or even years before filing for divorce, systematically moving money out of reach while maintaining the appearance of normalcy.
Control and Power: Financial control represents a form of power in relationships. Some individuals hide assets not necessarily to deprive their spouse, but to maintain control over financial decisions.
Fear of Fair Division: When one spouse has been the primary earner or has built substantial wealth, they may fear losing “their” money in a divorce, even though Michigan law treats most marital assets as joint property.
Supporting an Affair: Extramarital affairs cost money. Hotel rooms, gifts, trips, and maintaining a separate lifestyle require funds that must be hidden from a spouse.
Business Interests: Business owners sometimes undervalue their companies, hide income, or defer compensation to reduce their apparent wealth during divorce proceedings.
Protecting an Inheritance: While inheritances are typically separate property, some spouses hide these assets out of an abundance of caution or misunderstanding of the law.
Lifestyle Preservation: If one spouse has been living beyond the family’s apparent means—gambling, substance abuse, or maintaining expensive hobbies—they may hide the evidence of this spending.
Common Ways Spouses Hide Assets
Understanding the tactics used to conceal assets is the first step in uncovering them. Here are the most common methods:
The Cash Economy
Physical cash is virtually untraceable. A spouse may systematically withdraw cash from accounts, claim it was used for household expenses, and actually stockpile it. Business owners can skim cash from their businesses, and professionals who receive cash payments may simply not deposit them.
Red flags: Large ATM withdrawals with vague explanations, a spouse who insists on cash for purchases that could be made by card, or unexplained discrepancies between reported business income and the lifestyle your family maintains.
The Helpful Friend or Family Member
Assets can be temporarily “transferred” to trusted friends or family members with the understanding that they’ll be returned after the divorce. This might involve purchasing property in someone else’s name, “loaning” money to a relative, or having a friend hold valuable items.
Red flags: Sudden loans to family members with no formal documentation, purchases made in other people’s names, or your spouse’s unusually close involvement in a friend’s or relative’s financial affairs.
Business Manipulation
Business owners have numerous opportunities to hide assets. They can defer bonuses or income until after divorce, pay phantom employees (often a girlfriend or relative), overstate business expenses, underreport revenue, create fake debt to the business, or claim the business is worth less than it actually is.
Red flags: A suddenly struggling business that was previously profitable, new employees you’ve never heard of, unexplained drops in income during divorce proceedings, or your spouse’s reluctance to provide detailed business records.
Cryptocurrency and Digital Assets
Digital currencies and NFTs are increasingly used to hide assets. They can be purchased with marital funds and stored in digital wallets that are extremely difficult to discover without specific knowledge of their existence.
Red flags: Unexpected interest in cryptocurrency, large withdrawals categorized as “investments” with no clear documentation, technical jargon about digital wallets that seems inconsistent with your spouse’s typical technology use.
Offshore Accounts
While most people associate offshore accounts with the ultra-wealthy, professionals earning six figures can and do establish accounts in foreign countries to hide assets. These might be traditional bank accounts, investment accounts, or property purchases in countries with strong banking privacy laws.
Red flags: Frequent international travel, especially to known tax havens, unexplained wire transfers, foreign bank statements or correspondence, cryptocurrency purchases that could be funneled offshore.
Undisclosed Accounts and Investments
Your spouse may simply maintain bank accounts, investment accounts, brokerage accounts, or retirement accounts you don’t know about. These might have been established before marriage and never disclosed, or opened during marriage with statements sent to an alternate address.
Red flags: Mail being redirected to a P.O. box or alternate address, paperless statement preferences for accounts you share, unfamiliar financial institutions appearing on credit reports.
Delayed Income and Bonuses
Professionals with some control over their compensation can arrange to delay bonuses, commissions, stock option exercises, or contract payments until after divorce proceedings conclude. While this doesn’t permanently hide the income, it keeps it out of consideration for property division and support calculations.
Red flags: Sudden changes in compensation structure during divorce proceedings, claims that expected bonuses or commissions fell through, postponed stock option exercises with vague justifications.
Overpaying Taxes or Creditors
Some spouses deliberately overpay the IRS, mortgage lenders, or other creditors with the intention of receiving refunds after the divorce. They might also pay off non-existent debts to move money into the hands of someone who will return it later.
Red flags: Unexpectedly large tax withholding, voluntary additional payments to creditors when money is supposedly tight, large estimated tax payments inconsistent with actual tax liability.
Collectibles and Valuables
Valuable items can be hidden in plain sight. Art, jewelry, antiques, rare books, wine collections, classic cars, and even tools or equipment can represent substantial value while being easy to undervalue or hide.
Red flags: Items disappearing from the home with explanations about storage or lending, sudden interest in “decluttering,” valuable purchases you were aware of that are now unaccounted for.
Custodial Accounts for Children
While custodial accounts like UGMA or UTMA accounts are legally for children’s benefit, some spouses use these to park marital assets temporarily, with the intention of controlling these funds even though they’re technically the child’s property.
Red flags: Large transfers into children’s accounts that seem disproportionate to family income, reluctance to discuss college savings plans in detail, custodial accounts established only by your spouse without your involvement.
Legal Tools for Uncovering Hidden Assets
Michigan divorce law provides several powerful tools for discovering hidden assets. Understanding these mechanisms helps you work effectively with your attorney:
Mandatory Financial Disclosures
Michigan courts require both parties to file comprehensive financial disclosures. These include income statements, balance sheets, and sworn statements of assets and liabilities. Filing false disclosures carries serious legal consequences, but that doesn’t prevent some spouses from trying.
Your attorney will scrutinize these disclosures for inconsistencies, vague entries, or omissions. Common red flags include assets listed as “unknown value,” references to accounts with incomplete information, or lifestyle inconsistencies with reported income.
Interrogatories
These are written questions that your spouse must answer under oath. Carefully crafted interrogatories can uncover hidden assets by asking about specific types of accounts, past financial transactions, or relationships with particular financial institutions.
Interrogatories might ask about cryptocurrency wallets, offshore accounts, business interests, gifts to third parties, or any accounts established in the past five years. The key is asking questions specific enough to prevent evasive answers while covering all potential hiding places.
Requests for Production of Documents
Your attorney can request bank statements, tax returns, business records, credit card statements, investment account statements, and virtually any other financial document. The scope of these requests in divorce proceedings is broad, and refusal to comply can result in court sanctions.
Document requests should go back several years to establish patterns. Sudden changes in spending, unexplained transfers, or missing documentation become apparent when you have historical records for comparison.
Depositions
A deposition allows your attorney to question your spouse under oath before trial. Unlike written interrogatories, depositions permit follow-up questions, making it harder for your spouse to provide evasive answers. Body language, hesitations, and inconsistencies become evidence.
Forensic accountants often attend depositions involving complex financial matters. Their expertise helps identify areas requiring deeper investigation.
Subpoenas
Your attorney can subpoena records directly from financial institutions, employers, business partners, or anyone else who might have relevant information. This is particularly valuable when your spouse claims certain accounts or assets don’t exist—the subpoena can confirm or refute these claims.
Subpoenas to employers can reveal deferred compensation arrangements. Subpoenas to banks can uncover accounts you didn’t know existed. Subpoenas to business partners or shareholders can expose hidden business interests.
Court Orders for Access
If your spouse has locked you out of accounts or refuses to provide passwords for online banking, your attorney can seek court orders compelling access. Michigan courts have little patience for financial obstruction during divorce proceedings.
The Role of Forensic Accountants
For high-asset divorces or situations where hidden assets are suspected, hiring a forensic accountant is often essential. These specialized professionals have training and experience in uncovering financial deception.
What Forensic Accountants Do
Analyze Financial Records: They review years of bank statements, tax returns, and financial documents looking for patterns, anomalies, and red flags that might escape notice during casual review.
Trace Asset Movement: Using sophisticated techniques, they can follow money through multiple accounts and transactions to determine where it ultimately went.
Identify Unreported Income: By analyzing lifestyle versus reported income, they can determine if your spouse is underreporting earnings. If your family maintains a $200,000 annual lifestyle but your spouse reports $100,000 in income, something doesn’t add up.
Value Businesses: Business valuation requires expertise to prevent owners from artificially deflating their company’s worth.
Reconstruct Spending: Even when records are incomplete or destroyed, forensic accountants can often reconstruct spending patterns and account for missing funds.
Provide Expert Testimony: In court, their professional opinions carry significant weight. They can explain complex financial matters in ways judges understand.
Red Flags That Suggest Hidden Assets
Sometimes you don’t need forensic accounting to know something’s wrong. These warning signs suggest your spouse may be hiding assets:
Financial Secrecy: Your spouse has always been secretive about money, refusing to discuss finances, keeping statements hidden, insisting on handling all financial matters alone.
Lifestyle Discrepancies: Your family’s lifestyle doesn’t match the income your spouse claims, or expensive purchases appear without clear funding sources.
Control Issues: Your spouse insists on controlling all accounts, becomes defensive when you ask financial questions, or suddenly changes passwords and locks you out of accounts.
Document Destruction: Financial papers go missing, your spouse shreds documents you haven’t seen, or there’s resistance to keeping organized financial records.
Business Complexity: Your spouse’s business dealings become increasingly complex and opaque, with vague explanations for how the business actually makes money.
New Financial Behaviors: Your spouse suddenly becomes interested in cryptocurrency, starts traveling to countries with banking secrecy laws, or develops relationships with financial advisors you’ve never met.
Affair Indicators: Combined with signs of an affair—unexplained absences, secretive phone use, changes in appearance or behavior—financial secrecy may indicate funds being diverted to support the relationship.
Deliberate Unemployment: Your spouse quits a lucrative job or takes a much lower-paying position right before or during divorce proceedings, claiming they needed a change or were laid off.
Gambling or Substance Issues: If your spouse has gambling problems or substance abuse issues, they may be hiding the extent of spending in these areas.
Protecting Yourself Before Filing for Divorce
If you suspect your spouse is hiding assets or anticipate divorce, taking certain steps before filing can protect your interests:
Document Everything
Start gathering financial documents now. Make copies of tax returns, bank statements, investment account statements, business records, credit card statements, mortgage documents, vehicle titles, and insurance policies. Store copies somewhere your spouse cannot access them—a trusted friend’s house, a safety deposit box in your name only, or secure cloud storage.
Photograph valuable items in your home. Create an inventory of jewelry, art, collectibles, and other valuables with estimates of their value if possible.
Monitor Credit Reports
Pull credit reports for both you and your spouse. These reveal credit cards, loans, and other accounts you might not know about. Check them regularly during the divorce process for new accounts or suspicious activity.
You’re entitled to free annual credit reports from all three major bureaus. During divorce proceedings, consider paid credit monitoring to receive alerts about any changes.
Understand Your Finances
If your spouse has handled all financial matters, educate yourself now. Know what accounts exist, where financial documents are kept, who your financial advisors are, and generally understand your family’s complete financial picture.
Open mail that arrives, even if it’s typically addressed to your spouse. Financial statements, tax documents, and correspondence from financial institutions provide crucial information.
Secure Your Own Accounts
If you don’t already have accounts in your name only, consider establishing them—but be careful about transferring marital funds into individual accounts, as this could be viewed as hiding assets yourself.
Change passwords on accounts to which you have legitimate access. Your spouse might lock you out once divorce proceedings begin.
Consult an Attorney Early
Even if you’re not ready to file for divorce, consulting with an attorney helps you understand your rights and the steps you should take. Many attorneys offer free consultations and can provide guidance on protecting yourself legally.
An attorney can advise you on what actions are legally permissible. For instance, in Michigan, neither spouse should dissipate marital assets once divorce is contemplated, but you do have the right to protect your interests.
What NOT to Do
While protecting yourself is important, certain actions can harm your case:
Don’t Hide Assets Yourself: The temptation to fight fire with fire is strong, but hiding assets yourself is illegal and will damage your credibility with the court. Judges take an extremely dim view of financial dishonesty.
Don’t Destroy Evidence: Never destroy financial documents, delete emails, or dispose of items that might be relevant to the divorce. This can result in sanctions and adverse inferences.
Don’t Confront Aggressively Without Legal Advice: Confronting your spouse about suspected hidden assets before consulting an attorney can backfire. They might take steps to hide assets more effectively or destroy evidence.
Don’t Transfer Large Sums Without Documentation: Any money you move should have a clear, legitimate purpose and proper documentation. Unexplained transfers look like you’re hiding assets too.
Don’t Ignore Court Orders: If a court orders you to provide information or maintain certain accounts, comply fully. Non-compliance carries serious consequences.
The Consequences of Hiding Assets
When hidden assets are discovered—and they usually are—the consequences can be severe:
Unfavorable Property Division: Michigan courts have the authority to award the innocent spouse more than 50% of marital assets when the other spouse has hidden assets. The penalty often exceeds the value of what was hidden.
Court Sanctions: Judges can impose monetary sanctions, require payment of the other spouse’s attorney fees, or hold the offending party in contempt of court.
Spousal Support Implications: Hiding assets demonstrates bad faith and dishonesty, factors courts consider when determining spousal support obligations.
Loss of Credibility: Once you’re caught lying about assets, your credibility is destroyed. Judges will view everything you say with skepticism.
Criminal Charges: In extreme cases, hiding assets during divorce can result in criminal charges including perjury, fraud, or contempt of court.
Post-Divorce Modification: Even after divorce is finalized, if hidden assets are discovered, the case can be reopened and the property division modified. Some states allow this for several years after divorce.
Working with Your Divorce Attorney
Successfully uncovering hidden assets requires close collaboration with your divorce attorney. Here’s how to make that partnership effective:
Be Honest and Complete: Tell your attorney everything you know or suspect. Even small details might be significant. Attorney-client privilege protects your communications.
Follow Their Guidance: Your attorney understands what’s legally permissible and what strategies work. Follow their advice even if your instinct is to take different action.
Stay Organized: Provide documents and information in an organized fashion. The easier you make your attorney’s job, the more effectively they can represent you.
Be Patient: Uncovering hidden assets takes time. Discovery has deadlines and processes. Trust your attorney to pursue the investigation systematically.
Communicate Concerns: If you discover new information or have concerns about how your case is proceeding, communicate with your attorney. They can’t address issues they don’t know about.
Forging Ahead In Divorce
Discovering that your spouse has been hiding assets is a profound betrayal that adds emotional pain to an already difficult divorce. However, Michigan law provides robust tools for uncovering financial deception and ensuring you receive your fair share of marital assets.
The key is taking action early, working with experienced professionals, and understanding that while the process may be lengthy and complex, justice is achievable. Courts have seen every tactic for hiding assets, and they have the tools and authority to uncover the truth.
Get Expert Help with Financial Disclosure Issues
If you suspect your spouse is hiding assets or if you’re facing divorce and want to ensure you receive a fair settlement, contact The Mitten Law Firm today. Our experience with complex financial matters in Michigan divorce cases means we know what to look for and how to uncover hidden assets.
We’ll work with forensic accountants, conduct thorough discovery, and fight to protect your financial interests. Your spouse’s dishonesty shouldn’t determine your financial future.
Contact us today for a free consultation. We’ll review your situation, explain your options, and develop a strategy to ensure all marital assets are identified and fairly divided.