When a divorce begins, it feels like you didn’t know your spouse at all. Do you even know your spouse’s finances? What do you not know about your spouse’s income and assets? How will you find out what assets your spouse owns…that you may have a right to divide in your Illinois divorce? If there are hidden assets, what is the penalty for hiding assets in an Illinois divorce?
How To Find Out What Assets Your Spouse Owns In An Illinois Divorce
Expecting your soon-to-be-ex-spouse to be on their best behavior when disclosing assets in an Illinois divorce sounds ridiculous…but that is actually the standard.
Each party to an Illinois divorce is expected to honestly share a full accounting of their finances.
This full accounting usually starts by filling out a financial affidavit.
“One form of financial affidavit, as determined by the Supreme Court, shall be used statewide” 750 ILCS 5/501(a)(1)
Each county in Illinois has different standards for exchanging financial affidavits. For example, Cook County’s rules are:
“The service of the “Financial Affidavit” shall be as follows:
“The Petitioner shall serve the completed “Financial Affidavit” not later than thirty (30) days after service of the initial pleading and the Respondent shall serve the completed “Financial Affidavit” not later than thirty (30) days after the filing of the Responding party’s appearance; or.
(ii) Not less than seven (7) business days prior to a hearing, whichever date first occurs.” Cook County Court Rule 13.3.1(a)
You have to be honest when filling out a financial affidavit in an Illinois divorce!
“If a party intentionally or recklessly files an inaccurate or misleading financial affidavit, the court shall impose significant penalties and sanctions including, but not limited to, costs and attorney’s fees” 750 ILCS 5/501(a)(1)
There are no specific outlines in the Illinois Marriage and Dissolution of Marriage Act that define what those “significant penalties and sanctions” will be. Unfortunately, when someone gets caught lying on their financial affidavit, the penalty usually is just the judge telling them “fill out a new financial affidavit.”
Because of the initial self-professed honesty standard in an Illinois divorce’s financial disclosures, it is incumbent on each party to seek further disclosure and verification of the other party’s assets.
This next step of investigating hidden assets is usually done by issuing a Notice To Produce and Interrogatories to the opposing party.
Interrogatories are “written question[s] submitted to an opposing party in a lawsuit as part of discovery.” Black’s Law Dictionary (11th ed. 2019)
“A party may direct written interrogatories to any other party.” Ill. Sup. Ct. R. 213(a)
The appendix to Illinois supreme court rule provides a 128-question model matrimonial interrogatory for divorce. The matrimonial interrogatories have 98 more questions than the standard 30 question limit and have been used thousands of times before. Just use the matrimonial interrogatories to get some more basic questions answered.
A notice to produce is a big list of items that the average Illinois resident may own. If the opposing party in an Illinois does own one of these items, they must produce documentation regarding the item.
“Any party may by written request direct any other party to produce for inspection, copying, reproduction photographing, testing or sampling specified documents, including electronically stored information as defined under 201 (b)(4), objects or tangible things…or to disclose information calculated to lead to the discovery of the whereabouts of any of these items, whenever the nature, contents, or condition of such documents, objects, tangible things, or real estate is relevant to the subject matter of the action. The request shall specify a reasonable time” Ill. Sup. Ct. R. 214(a)
Most divorce lawyers use a standard Notice To Produce to initially discovery the other party’s income and assets.
Again, we are relying on the opposing party to tell us what assets they have or do not have. Presumably, the documents they will be providing regarding those assets will be third-party verifications. The documents they provide may even reveal other assets they may have.
Money has to come from somewhere, be somewhere or have gone to somewhere. For example, bank statements often reveal transactions to other bank accounts. You cannot make a bank transfer to a bank account that you do not also own. Even a bank transfer to a bank that a spouse does not own is worthy of further investigation.
Money rarely if ever sits still. The transactions will lead to the assets. To quote the stick-up man who lived by a code, Omar Little from HBO’s “The Wire,” “Money ain’t got no owners, only spenders.”
If assets are still unknown at this point of discovery, there are two options left to make further inquiries: depositions and subpoenas for documents.
A deposition will largely be more interrogatory-like questions, except face-to-face.
A deposition is “a witness’s out-of-court testimony that is reduced to writing (usually by a court reporter) for later use in court or for discovery purposes.” Black’s Law Dictionary (11th ed. 2019)
A deposition allows you to question the opposing party or any other person about the missing finances. The questioned party is under oath and usually tells the truth or at least provides a semi-logical explanation.
Subpoenas for documents are typically sent to third parties who have access to relevant documents. Those third parties produce documents which could illuminate, verify or contradict the other documents already received. This is where hidden assets are usually uncovered (but not before going through the trail of breadcrumbs established via notices to produce, interrogatories and depositions).
Hidden assets are rarely hidden so much as they are confusing. For example, a spouse may own a company with a partner, that owns another company which has unrecorded cryptocurrency. Explaining that to a divorce judge will not be easy…or fun.
Divorce judges do not want to be forensic accountants. Divorce judges will gladly appoint a financial expert to sort through the web of assets, pseudo-assets and missing assets.
“The court may seek the advice of financial experts or other professionals, whether or not employed by the court on a regular basis. The advice given shall be in writing and made available by the court to counsel. Counsel may examine as a witness any professional consulted by the court designated as the court’s witness. Professional personnel consulted by the court are subject to subpoena for the purposes of discovery, trial, or both.” 750 ILCS 5/503(l)
The financial expert’s report will, likely, be the last word on what assets exist…and what assets appear to be missing.
What Happens If There Are Still Missing Assets At The End Of Discovery In An Illinois Divorce?
If assets appear to still be missing, a motion for sanctions can be filed by the other party requesting various punishments. Supreme Court Rule 219 provides the penalties for failure to disclose missing assets.
If the other party simply refuses to disclose a missing asset…and you have third party evidence that it exists (from a subpoena), the court will order production of evidence of that hidden asset.
“If a party or other deponent refuses to answer any written question upon the taking of his or her deposition or if a party fails to answer any interrogatory served upon him or her, or to comply with a request for the production of documents or tangible things or inspection of real property, the proponent of the question or interrogatory or the party serving the request may on like notice move for an order compelling an answer or compliance with the request. If the court finds that the refusal or failure was without substantial justification, the court shall require the offending party or deponent, or the party whose attorney advised the conduct complained of, or either of them, to pay to the aggrieved party the amount of the reasonable expenses incurred in obtaining the order, including reasonable attorney’s fees.” Ill. Sup. Ct. R. 219(a)
The attorney’s fees associated with this enforcement will be paid by the spouse with the hidden asset.
“If the court finds that the refusal or failure was without substantial justification, the court shall require the offending party or deponent, or the party whose attorney advised the conduct complained of, or either of them, to pay to the aggrieved party the amount of the reasonable expenses incurred in obtaining the order, including reasonable attorney’s fees.” Ill. Sup. Ct. R. 219(a)
“In every proceeding for the enforcement of an order or judgment when the court finds that the failure to comply with the order or judgment was without compelling cause or justification, the court shall order the party against whom the proceeding is brought to pay promptly the costs and reasonable attorney’s fees of the prevailing party. If non-compliance is with respect to a discovery order, the non-compliance is presumptively without compelling cause or justification, and the presumption may only be rebutted by clear and convincing evidence.” 750 ILCS 5/508(b)
Let’s get real. The hidden asset is worth more than the attorney’s fees. The spouse with the hidden asset is never going to turn over the asset’s details based on a possible fine.
Luckily, there are several other more severe penalties for having hidden assets in an Illinois divorce.
Penalties For Hiding Assets In An Illinois Divorce
“If a party, or any person at the instance of or in collusion with a party, unreasonably fails to comply with any provision…the rules of this court (Discovery, Requests for Admission, and Pretrial Procedure) or fails to comply with any order entered under these rules, the court, on motion, may enter, in addition to remedies elsewhere specifically provided, such orders as are just, including, among others, the following:
“(i) That further proceedings be stayed until the order or rule is complied with;” Ill. Sup. Ct. R. 219(c)(i)
Under this penalty, you can just leave the asset hider married to their spouse. Presumably, the asset hider is accumulating other assets…which remain marital and, thus, can still be divided in an Illinois divorce.
“‘[M]arital property’ means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a)
“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)
Rule 219(c) further allows the court to order “[t]hat the offending party be debarred from filing any other pleading relating to any issue to which the refusal or failure relates” Ill. Sup. Ct. R. 219(c)(ii)
Additionall, a court can order “[t]hat the offending party be debarred from maintaining any particular claim, counterclaim, third-party complaint, or defense relating to that issue” Ill. Sup. Ct. R. 219(c)(iii)
These strictures essentially prevent the asset hiding spouse from making any proactive legal moves regarding the division of assets (while still allowing them to resolve other issues like child support, maintenance and parenting time)
The court can go so far as to simply resolve the case by holding the asset hiding spouse in default thereby granting everything in the other spouse’s Petition For Dissolution Of Marriage.
“That, as to claims or defenses asserted in any pleading to which that issue is material, a judgment by default be entered against the offending party or that the offending party’s action be dismissed with or without prejudice” Ill. Sup. Ct. R. 219(c)(iii)
More likely, a court will make the asset hiding spouse sit through their own trial in silence as the court can order ““That a witness be barred from testifying concerning that issue” Ill. Sup. Ct. R. 219(c)(iv)
If an asset hiding spouse cannot testify…an Illinois divorce court can only rely on the other spouse’s estimates of a marital property’s existence and value.
“[I]t is the parties’ obligation to present the court with sufficient evidence of…the property [and its value]” In re Marriage of Smith, 114 Ill. App. 3d 47, 54 (Ill. App. Ct. 1983)
Of course, this only helps if the spouse who isn’t hiding an asset has some idea of what assets may be hidden in order to testify to that asset’s existence and value.
Often assets can be hidden for years only to be discovered after the divorce.
Penalties For Hiding Assets After A Divorce Is Completed In Illinois
After an Illinois divorce is finalized, the property settlement is usually considered unmodifiable.
“The provisions as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this State.” 750 ILCS 5/510(b)
“Property provisions of an agreement are never modifiable.” 750 ILCS 5/502(f)
When a spouse successfully hides assets from their spouse and the courts, sooner or later they are going to spend or use that asset.
If it the hidden asset becomes apparent after the judgment for dissolution of marriage is entered, the entire divorce judgment can be vacated for recalculation and redistribution based on the now discovered asset.
“Although property settlement agreements are generally favored, an agreement may be vacated if it is unconscionable or if it is the product of fraud or coercion on the part of either party. Fraud exists where one party’s knowing and material misrepresentations induce detrimental reliance by the other party. Fraudulent concealment consists of affirmative acts or misrepresentations intended to exclude suspicion or prevent injury. However, nondisclosure of a material fact is in essence a misrepresentation.’” In re Marriage of Palacios, 275 Ill. App. 3d 561, 566 (Ill. App. Ct. 1995)
It is enormously difficult to undo an Illinois divorce based on a hidden asset. You must prove that you did not kno the asset existed at the time of the divorce and you could not have learned of the asset’s existence before the divorce was finalized.
“[T]he petitioner must show the new evidence was not known to [him or] her at the time of the proceeding and could not have been discovered by the petitioner with the exercise of reasonable diligence. Stated another way, the evidence must be such as could not reasonably have been discovered at the time of or prior to the entry of the judgment.” MARRIAGE OF BRUBAKER v. Brubaker, 2022 IL App (2d) 200160 – Ill: Appellate Court, 2nd Dist. 2022 (citations and quotation omitted)
If you manage to reopen the divorce, the entire divorce process starts from scratch which is punishment in itself.
Can A Spouse Go To Jail For Failure To Disclose A Hidden Asset In An Illinois Divorce?
While it would be tempting to throw a spouse with hidden assets in jail…do not get your hopes up.
The Illinois Marriage And Dissolution of Marriage Act allows for body attachments (civil orders of arrest) only in relation to unpaid child support and maintenance.
“In any proceeding to enforce an order for support, where the obligor has failed to appear in court pursuant to order of court and after due notice thereof, the court may enter an order for the attachment of the body of the obligor” 750 ILCS 5/713(a)
In this unlikely scenario, the asset hider would be immediately released upon revealing the hidden asset.
“Whether for direct or indirect civil contempt, the order must specify what the contemnor is required to do, so that by compliance contemnor can purge himself of contempt and be discharged from jail.” Pancotto v. Mayes, 304 Ill. App. 3d 108, 112, 709 N.E.2d 287, 290 (1999)
But how would the Illinois divorce judge ever know that the disclosure of the hidden asset (from a jail cell no less) was truly complete? So, any disclosure would likely satisfy the purge and require release of the asset hiding spouse.
“They are imprisoned only until they comply with the orders of the court, and this they may do at any time. They carry the keys of their prison in their own pockets.” In re Nevitt, 117 F. 448, 460 (8th Cir. 1902)
Punishment should not be your goal in an Illinois divorce. Your goal should be an “equitable division of the marital assets.” Sometimes it takes a little punishment to get to that point.
To learn more about how to properly investigate and enforce discovery orders, contact my Chicago, Illinois family law firm to schedule a free consultation with an experienced Illinois divorce attorney.