One strategy that some people employ during their divorce case is to hide assets or income streams to prevent the other spouse from making a fair recovery during their divorce. As you well know, the marital estate is divided during divorce, and not always equally. However, it is fraud to misrepresent your assets when going through a divorce. The courts tend not to take kindly to those who try. In this article, we’ll discuss an Indiana divorce case that featured one party attempting to hide assets. 

Background of the case

John W. Hughes v. Heather K. McKenzie, Court of Appeals of Indiana, Sept. 10, 2024 (No. 23A-DN-1816) is one case that featured an attempt to hide assets. The couple was in the process of dissolving their marriage. A trial court had entered a mutual restraining order that prevented either party from dissipating (or concealing) marital assets. Hughes reportedly violated this order by failing to disclose specific assets and by withdrawing a substantial amount of money without authorization. McKenzie’s attorney sought fees as a sanction against Hughes, alleging she incurred additional litigation costs due to Hughes’s misconduct. 

The trial court found that Hughes had failed to disclose specific assets during the divorce proceedings and had acted in violation of the court order not to dissipate the marital estate. As a sanction, the court ordered Hughes to pay $20,000 of McKenzie’s attorney fees. Hughes appealed the ruling, arguing that the fee award was improper and excessive. 

The question then became: Did the trial court abuse its discretion by awarding attorney fees as a sanction for the hidden assets and violation of court orders? 

Outcome and reasoning

Hughes attempted to appeal the case and failed. The appeals court affirmed the trial court’s decision to sanction Hughes for both dissipating the marital estate by withdrawing money from a marital bank account and for hiding assets during financial disclosure. 

In Indiana, the courts have discretion to award attorney fees during dissolution proceedings. This is especially true when one party’s misconduct increases the litigation costs, as it did in the aforementioned case. Hughes’ failure to disclose assets and his violation of the restraining order significantly increased McKenzie’s litigation expenses. It also undermined the integrity of the proceedings. 

The court found that the sanction was proportionate to Hughes’ misconduct. He ended up paying for his wife’s attorney fees as a result of attempting to bamboozle the court. 

Talk to a Danville, Indiana, Divorce Lawyer Today

Chris Arrington represents the interests of Indiana residents who are pursuing a divorce. Call our office today to schedule an appointment, and we can begin reviewing your case right away.