As a divorce lawyer in downtown Portland Oregon, I frequently get asked about hidden assets in divorce in traditional litigation cases. Sometimes a client is concerned the opposing party may be concealing assets. Sometimes individuals are curious about their obligations to disclose assets in divorce. There are many discovery tools available to lawyers to help discover assets a party may own. For example, ORS 107.089 mandates basic discovery between parties in divorce if a copy of the relevant statute is served on the other side. (See our blog post regarding statutory discovery here) There are also serious ethical consequences for lawyers that assist clients in concealing assets during divorce.
In collaborative divorce cases, parties have an obligation to disclose all relevant information to the other side. If both parties are sincerely engaged in the collaborative process, the process is superior to the traditional litigation model in many ways. But what happens if someone misuses the collaborative process to conceal assets? The purpose of this post is to discuss what Oregon divorce courts can do after divorce if an asset was left out of the distribution.
Assets can be “omitted” two ways, intentionally or accidentally. ORS 107.452 specifies what the divorce court can do if a party discovers an omitted asset post divorce. If a party alleges that significant assets belonging to either party (1) Existed at the time of the entry of the judgment; and (2) Were not discovered until after the entry of the judgment; the divorce court must reopen the case.
If the assets were accidentally or inadvertently omitted from the distribution, the court shall make such distribution of the omitted assets as is just and proper in all the circumstances. Basically, if the omission was an accident, the court will divide the asset using the same legal standard as if the asset were discovered prior to the divorce.
The court can hand out harsher remedies in the event an asset was intentionally concealed. If the court finds evidence of intentional concealment, it can order:
1. The division of the appreciated value of the omitted assets;
2. The forfeiture of the omitted assets to the injured party;
3. A compensatory judgment in favor of the injured party;
4. A judgment in favor of the injured party as punitive damages; or
5. Any other distribution as may be just and proper in all the circumstances.
The court can order attorney fees on a motion to reopen a divorce case. A fee award is mandatory if the court finds a party intentionally concealed assets. We previously blogged about how the court decides if fees are appropriate, and if so, how much. Many of the factors the court considers in awarding fees factor in to concealed asset cases.
There are statutory remedies if an asset is accidentally omitted in the collaborative process, or worse, if the collaborative process is misused to conceal assets. Time limitations apply. If you discover an omitted asset in a collaborative case and the omitting party will not remedy the situation voluntarily, you should consult with an experienced family law attorney.