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Thursday, July 10, 2014

Reville v. Reville - Property Division and Proper Disclosure of Marital Assets

In any divorce action, both parties are legally responsible to be forthcoming about existing assets, which must be considered for distribution within the marital estate. Disclosure of an asset doesn't mean it will necessarily be lost to the owner, but it may reduce the share of other assets awarded to the party allowed to keep it.

Our Brooklyn divorce lawyers recognize this unfortunately creates a powerful incentive for parties to conceal assets. But make no mistake: The court considers such action a form of fraud, and the consequences can be harsh, whether the concealment is discovered immediately, or many years down the road. 

That was the case in  Reville v. Reville, weighed recently by the Connecticut Supreme Court. Here, the allegedly undisclosed asset was an accrued but unvested pension fund.

The parties divorced in May 2001, following a 14-year marriage. Incorporated into the final divorce decree was alimony and child support paid to the wife, as well as equitable distribution of marital property consistent with a written separation agreement.

Four years after the divorce, the wife filed an amended post-judgment motion with the court, asking that the case be re-opened and the final decree set aside because her ex, a partner with one of the world's largest professional services networks, had failed on all four financial affidavits to list the existence of a pension fund. The ex-wife asserted she relied on those affidavits in considering the scope of her former husband's assets, and that the pension was sizable - likely valued at more than $2 million. She alleged that had she known of the fund's existence, she would not have signed off on the separation agreement because it lacked a provision for her to receive any amount of interest or other form of compensation for waiving her share. She asserted her ex should forfeit the account entirely, as he had intentionally concealed it.

The trial court considered first whether the account was marital property, and secondly whether the defendant fraudulently failed to disclose it. The court found evidence, amid conflicting testimony, that the defendant disclosed it verbally, and therefore the plaintiff was not entitled to distribution.

The state supreme court reversed.

The court indicated there are three elements the plaintiff needed to show in order to be granted relief: No unnecessary delay on her part following discovery of the fraud, clear proof of fraud and the reasonable probability that the outcome of a new trial would be different in light of the new information.

The court found the plaintiff had achieved this threshold. The trial court had erroneously relied on a previous case, establishing a "deeply flawed legal framework" for its decision, meaning the outcome was also faulty.

The state supreme court disagreed with the trial court's conclusion that the account was not marital property subject to distribution. The account should have been considered in the dissolution agreement, the justices ruled.

Hiding assets isn't the only way parties in a divorce can commit fraud in the proceedings. There have also been instances in which parties overstate debts, report lower than actual income or report higher than actual expenses. Any of these actions could result in denying the other party a fair settlement.

Having an experienced legal team on your side to knowledgeably approach the case and aggressively defend your interests is essential.

If you are contemplating a divorce in New York City, call our offices at (718) 864-2011.

Additional Resources:
Reville v. Reville, July 8, 2014, Connecticut Supreme Court

More Blog Entries:

Stanley v. Stanley - Marital Misconduct and Impact on Property Division in New York Divorce, June 9, 2014, New York City Divorce Lawyer Blog

 


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