Can spouses hide assets by transferring funds to relatives' accounts in divorce cases? Liston v. Liston Explained

In Liston v. Liston, the Utah Court of Appeals addressed a husband’s attempts to shield assets from property division by transferring investment funds to accounts held in his wife’s and mother’s names. The case provides important guidance on how courts analyze commingling and asset concealment in divorce proceedings.

Background and Facts

The parties, both 65 years old at marriage, divorced after five years and eight months. During the marriage, the husband maintained several investment accounts and engaged in complex financial maneuvers. He transferred $161,984.31 from his account to an account solely in his wife’s name, then six months later moved those funds to an account opened in his mother’s name. The husband claimed these transfers were to protect assets from his second wife’s divorce judgments.

Key Legal Issues

The court examined whether the husband’s investment account funds constituted separate property or marital property, whether credit card debt incurred by the wife constituted a marital obligation, and whether water company stock shares were appurtenant to the marital home. Additionally, the court considered whether the husband’s conduct warranted attorney fee sanctions.

Court’s Analysis and Holding

The court applied the abuse of discretion standard for property division decisions while reviewing legal conclusions about property characterization for correctness. The court found that the husband had commingled marital and separate funds by using accounts as repositories for marital earnings and day-to-day expenses. The transfers to relatives’ accounts did not preserve the separate character of the funds but rather demonstrated attempts to hide assets. The court determined $273,050 of the investment funds were marital property, awarding the wife half that amount.

Practice Implications

This decision demonstrates that courts will scrutinize complex financial transactions and reject attempts to characterize asset protection schemes as legitimate separate property preservation. Practitioners should document the source of all funds and avoid commingling separate and marital assets. The court’s willingness to impose attorney fee sanctions for “blatant attempts to hide assets” serves as a warning that obstreperous conduct will have financial consequences beyond unfavorable property division.