In a typical scenario, if you later find out that your spouse has hidden an asset, you’d have one year after entry of the divorce decree to request the court to vacate the order based upon the fraudulent concealment. If you miss this deadline, you can attempt the difficult route of vacating the order so long as you can prove extrinsic fraud, that you could not have discovered the fraud with reasonable diligence sooner than one year after the judgment, and the traditional elements of fraud.
A recent Iowa Court of Appeals opinion demonstrates the heavy burden the moving party has in attempting to vacate a decree when it has been longer than a year. In In Re the Marriage of Hutchinson, an Iowa couple divorced in 2010. 2021 WL 3076299 *1 (Iowa Ct. App. July 21, 2021). In the divorce, the husband represented himself while the wife had an attorney. During the financial discovery process of the divorce, the husband disclosed that he had a retirement account with his employer. He did not, however, mention that he also had a pension.
Four days prior to finalizing the divorce, the husband delivered paperwork to the wife’s attorney that requested the wife release any right to his retirement accounts. This paperwork indicated the employee may have two types of retirement accounts: the account the husband disclosed and the pension. Although the paperwork noted that the employee may have both of these accounts, it did not indicate which accounts the husband had. Without further follow up, the wife signed off on the document.
Approximately five years after the divorce, the husband bragged to the wife that he was living well off his pension and that it was “too late” for her to do anything about it. In response, the wife asked the court to vacate the 2010 divorce decree based on the husband’s fraud. Unfortunately, she did not prevail. Although the Iowa Court of Appeals did not condone the husband’s conduct, the Court reasoned that the wife could have reasonably discovered the pension based upon the paperwork the husband submitted prior to the decree’s approval.
Although the facts of Hutchinson are highly unusual, there is a risk that even if you discover a concealed asset that you will not be able to recover it. What can you do to prevent this from happening? Well, for starters, while gearing up for a divorce, it is wise to be observant of your family’s finances. It is likely that you and your spouse have had discussions about your family’s budget or even retirement planning. If you have heard your spouse mention a stock account before, but it is never addressed through the financial disclosure process, bring it to your attorney’s attention.
If you have historically not discussed these matters with your spouse, try to do so before the divorce is started. Also, take note of items that are mailed to your home. Likely, if your spouse regularly receives mailings from a financial institution, there is an asset behind it. Other things you can do include taking pictures of assets that may be easily liquidated (cash, coin collections, etc.) and hiring an experienced attorney who can carefully review paystubs, bank account statements, credit card statements, and tax returns for other potentially hidden assets.
Because one of the hardest parts of a divorce is the accompanying financial uncertainty of a split household, every dime counts, and you’d be wise to be vigilant about your financial future.