Sometimes the financial records in a divorce do not tell a consistent story. Reported income may not match household spending. A familiar account may be missing from the records. A business may show an unexpected change in revenue, or transactions may appear without a clear explanation.
None of these circumstances automatically means a spouse is hiding assets. But unexplained differences can justify a closer review before property is divided. Minnesota requires a just and equitable division of marital property, which does not necessarily mean an equal 50/50 split. An accurate financial picture is therefore an important part of a Minnesota family law proceeding.
When the Numbers Stop Making Sense
Marital property generally includes property acquired by either spouse during the marriage and before the valuation date, subject to statutory exceptions. During a divorce, questions can arise when financial records do not appear to account for all of that property.
Potential issues may include unexplained transfers, accounts that are missing from financial records, unusual changes in business income, or property whose ownership or value is unclear. Assets such as real estate, retirement accounts, investments, business interests, and digital assets can require additional review when the available records are incomplete or inconsistent.
The goal is not to assume concealment based on a single transaction. It is to determine whether the financial information accurately reflects the property that may need to be addressed in the divorce.
Following the Financial Trail Through Discovery
When the information voluntarily exchanged by the spouses does not answer important financial questions, Minnesota’s discovery process provides formal methods for obtaining relevant information. Discovery is the legal process parties use to request information and evidence from each other before a case is resolved.
Depending on the case, discovery may include:
- Interrogatories: written questions that the other party answers under oath.
- Requests for production: requests for documents such as bank statements, tax returns, business records, and account information.
- Depositions: sworn testimony taken outside the courtroom and recorded for use in the case.
- Subpoenas: legal demands that can require third parties to provide documents or testimony.
Complex financial records may also require professional analysis. A forensic accountant is a financial professional who analyzes records and transactions for use in disputes or legal proceedings. One may be useful when a divorce involves business ownership, complicated transactions, or substantial records that need to be traced and compared.
Minnesota Law Addresses Concealed Marital Assets
Minnesota law specifically addresses what can happen when a spouse improperly transfers, encumbers, conceals, or disposes of marital assets during or in contemplation of a divorce. Encumbering an asset means placing a financial obligation or claim against it, such as certain liens or debts.
Spouses have a fiduciary duty concerning these transactions. A fiduciary duty is a legal obligation to act honestly with respect to the financial interests covered by the law.
If the court finds that one spouse improperly transferred, encumbered, concealed, or disposed of marital assets, Minnesota law directs the court to compensate the other spouse by placing both parties in the position they would have occupied if the improper conduct had not occurred.
The court may do this by including the affected asset in the marital estate and attributing its value, along with a fair return, to the spouse responsible for the improper conduct. The purpose is to account for the missing value when the marital property is divided.
What If the Asset Is Found After the Divorce?
A hidden or previously unknown asset may not come to light until after the divorce judgment has been entered. Minnesota law allows a court to grant relief from parts of a divorce judgment in certain circumstances, including newly discovered evidence, fraud, misrepresentation, or misconduct.
Timing is important. A motion based on newly discovered evidence, fraud, misrepresentation, or misconduct generally must be brought within a reasonable time and no more than one year after entry of the judgment or order. Different rules can apply to fraud upon the court.
Because these deadlines and legal standards are specific, discovering an unexplained asset after a divorce does not automatically mean the property division can be reopened. The facts and timing need to be evaluated under the applicable rule.
Protecting the Financial Picture in a Lake Elmo Divorce
If something in the financial records appears incomplete or inconsistent, the next step is to identify what information is actually missing. Before assuming an asset has been concealed, it can help to:
- Compare financial disclosures with records already available to you.
- Note unexplained accounts, transfers, debts, or income differences.
- Preserve financial records you lawfully possess or can access.
- Avoid accessing accounts or records you are not legally authorized to use.
- Determine whether formal discovery or additional financial analysis may be appropriate.
An attorney can review the available information and determine which discovery tools may be appropriate. A lawyer can also help identify whether a questionable transaction involves marital property and how Minnesota’s concealed-asset rules may apply.
Coodin Law Office, LLC is a Lake Elmo law office serving individuals and families in Woodbury, Washington County, and surrounding Minnesota communities. If financial information in your divorce appears incomplete or inconsistent, contact our law office to discuss the records and legal issues involved.