Division of property (including financial and/or real property assets) within a divorce is a complex issue. This issue becomes ever more trying when a spouse, before the completion of the divorce, takes action to disrupt the financial and property assets that you have worked to acquire throughout the marriage. In Ohio, there is a solution to this problem – a finding of financial misconduct.
What is Financial Misconduct?
Financial Misconduct is defined as a spouse engaging in actions, including, but not limited to, the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets. Some common examples include:
- Acquiring significant debt that is unusual for the marriage
- Hiding financial assets
- Underreporting income
- Overpaying taxes
- Selling assets
- Extreme gambling
- Spending large sums on a paramour
- Transferring title to property to third parties
- Withdrawal of retirement funds
- Large gifts to third parties
Hiding financial assets by transferring money between financial institutions, and large withdrawals are two of the most common forms of financial misconduct in a divorce. This commonly occurs when one party is attempting to hide the parties' marital money in separate accounts or worse yet, in their "dresser drawer," so the other spouse is not able to receive their half interest.
However, another form of financial misconduct is acquiring significant debt that was not typical for the marriage. This occurs when, instead of hiding the marital money, a spouse will spend the marital assets in extreme ways, in order to ensure that the other spouse is not able to receive their one-half interest. The most common examples of this are pre-payment of taxes and utilities, extreme gambling, and overuse of joint credit cards.
How Do I Know and Show This is Happening?
To know that financial misconduct is happening or has occurred, one must be aware of what assets they have. To ensure that you know of all assets of the marriage, you can do the following:
- Keep an Inventory – Keep a list of all the assets of your marriage.
- Get a Credit Report – If you are unsure of the extent of your assets, a simple credit report can identify the different financial accounts that are in your or your spouse's name.
- Obtain Usernames/Passwords for Accounts – If you are aware of financial assets, such as bank and retirement accounts, try to obtain/retain usernames and passwords to all accounts.
- Keep Track of Your Assets' Values – In addition to keeping a list of all financial accounts and property assets you own in the marriage, also make sure you know their current values.
The burden of proof to show this misconduct is on the complaining party. There is no requirement that you must show your spouse had malicious intent or bad faith in their actions. A complaining party must only show that the spouse is knowingly engaged in the wrongdoing that causes the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets.
Discovery: To prove the misconduct, a party will first obtain the necessary documents for all accounts, property, and any other asset. This can be done through the following methods: If you notice that your spouse is taking actions, such as those listed above, to dissipate, destroy, conceal, avoid disclosure of, or fraudulently dispose of your marital assets, there are ways you and your attorney can go about proving such, including:
- Subpoenas
- Credit Reports
- Requests for Production of Documents
- Requests for Interrogatories
- Requests for Admissions
Forensic Accounting: A spouse may hire a forensic accountant to track and trace the movement of assets. These forensic accounts will be able to create a report of the offending spouse's actions.
How Will This Effect My Divorce?
If a court finds that financial misconduct was committed, they may compensate the offended spouse with a distributive award or with a greater award of the marital property. The court can decide to:
- Make the offending spouse pay the offended spouse money damages to make up for their misconduct and the assets that were dissipated, destroyed, concealed, did not disclosure, or fraudulently disposed of; or
- Award the offended spouse a larger portion of the marital property to make up for the assets that the offending spouse dissipated, destroyed, concealed, did not disclosure, or fraudulently disposed of.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
