Your Marital Assets Could Be In Jeopardy if Your Spouse is Engaging in Financial Wrongdoing During a Divorce Action. Can The Ohio Courts Step In?
The time leading up to a divorce and the actual divorce process can be quite bumpy and unpleasant. Oftentimes, the unknowns of divorce will lead to irrational thinking and bad behavior by one or both of the spouses. While some bad behavior is simply frowned upon, other forms of misconduct are actually illegal. For instance, if your spouse is intentionally scheming to hide or waste your marital assets in an attempt to interfere with your right to an equitable distribution during the divorce, you may have a claim of financial misconduct.
What is the law in Ohio behind financial misconduct in a divorce action?
Under Ohio law, “if a spouse has engaged in financial misconduct , including, but not limited to, the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets, the court may compensate the offended spouse with a distributive award or with a greater award of marital property.” O.R.C. § 3105.171(E)(4). A spouse has committed financial misconduct if he or she has engaged in some kind of wrongdoing and he or she either profits from the wrongdoing or intentionally depletes the other spouse’s distribution of marital assets.
What are some examples of financial misconduct?
Here is a brief, but not a complete list, of some actions by a spouse that may constitute financial misconduct:
- Running up significant debt on credit cards
- Pocketing or hiding cash from their own business
- Withdrawal of money from a retirement account
- Cashing out on a life insurance policy
- Withdrawal of money from a child’s college fund
- Closing or withdrawing large sums of money from a bank or brokerage account
- ntentionally damaging an asset
- Selling off assets for less than the fair market value
- Significantly downplaying the value of a property or business
- Making large purchases and then gifting the purchase to a lover, friend, or relative
- Hiding bank accounts or other investments
- Deeding property to a third-party
- Spending significant money on a paramour
- Losing marital money through gambling
What must I prove?
The party claiming financial misconduct carries the burden of proving the misconduct to the court. However, in a divorce action in Ohio, malicious intent is not necessary for a court to hold that financial misconduct has occurred and that the innocent spouse is entitled to a greater award of marital property. Instead, Ohio courts have held that a court need only find that a spouse has engaged in knowing wrongdoing.
The period of time in which the alleged financial misconduct occurred may reveal knowledge of wrongdoing. For example, if your spouse starts to deplete your marital assets or funds during the pendency of your divorce case or immediately prior to the filing for divorce then this time frame may be used as evidence to prove that your spouse had knowledge of wrongdoing. However, note that if you were aware of your spouse’s wrongdoing during the marriage then this fact may weigh against you in a finding of financial misconduct.
What do I get if I prove financial misconduct occurred?
Ohio law empowers a court to punish the spouse who has committed financial misconduct. Since Ohio divorce courts are courts of equity, the court may award the innocent spouse a distributive award. A distributive award means that the spouse who has committed wrongdoing must then use their separate property (i.e., property acquired before the marriage or their inheritance) to make a payment to the innocent party in order to make them whole again. In the alternative, the court also has the power to award the innocent party more of the marital assets to account for financial misconduct.
If you want to learn more about dealing with a spouse that may be attempting to hide income or assets, click here to download a “whitepaper e-booklet” I wrote, entitled Finding Hidden Income/Assets During a Divorce.
Questions about financial misconduct during your marriage or divorce? Schedule An Appointment Today!
At Holzfaster, Cecil, McKnight & Mues, located in Dayton, Ohio, top-notch family law and divorce representation is provided by our experienced divorce lawyers! To learn more, go to our website at www.hcmmlaw.com. Or, please contact us at (937) 293-2141 to schedule an appointment for an initial consultation which can be conducted either by phone or in person.
PUBLISHER’S NOTE: I want to thank Mickenzie Grubb for writing this blog. She is a 3rd year law student from the University of Dayton School of Law, who is externing with our firm this semester. Well done Mickenzie!
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Robert L. Mues
Attorney Robert "Chip" Mues has been focusing his legal practice throughout Southwest Ohio primarily in divorce and family law matters since 1978. Chip is passionate about family law and has proudly published the Ohio Family Law Blog since 2007. In addition, he is the managing partner of Holzfaster, Cecil, McKnight & Mues. To learn more about him or the law firm, visit the firm's website at www.hcmmlaw.com. Appointments are available in person, over the phone or by Zoom. Call us at 937 293-2141.