What You Need to Know About Financial Disclosures in a Divorce

What You Need to Know About Financial Disclosures in a Divorce Money is a hot-button issue when it comes to most relationships, even on a good day. If a couple is in the process of breaking up, the temperature – and the stakes – are even higher. One of people’s biggest concerns during a divorce is always who will get what, including any property and financial assets. Some people may worry they won’t get their fair share, especially if the other partner is the primary breadwinner or holds more personal assets. Divorce is a difficult thing, both logistically and emotionally. A partner who doesn’t know exactly what to expect after a divorce might even be tempted to grab whatever they can and start stockpiling it away. But in order to split everything equitably, both parties need to be honest and put everything on the table. So how can a couple achieve full transparency?

Enter the financial disclosure

Put simply, a financial disclosure is a document you and your attorney can create. But even at its simplest, it’s also a very important legal tool. Financial disclosures are necessary to formally identify and list everything the couple owns. Disclosing is crucial since partners don’t always know every detail of their spouse’s financial holdings or other assets. Through the process of discovery, both parties get on the same page regarding their financial picture.

During discovery, spouses disclose their respective annual salaries and any other income streams (such as commissions, fees, tips, and even gambling income). The best way to get a clear picture of each person’s income is to share pay stubs and government tax documents (like annual tax returns). When possible, presenting official documents is the best option to eliminate any guesswork or approximation. Screenshots with a current date or timestamp may be acceptable, but word of mouth or “guesstimations” aren’t appropriate for finalizing divorce proceedings.

In addition to income, both parties should also share the following information:

  • All bank statements (checking, savings, and money market accounts)
  • Valuations of any stocks and bonds
  • Retirement accounts (including IRAs, 401ks, or pension accounts)
  • Any other financial holdings such as insurance plans
  • Value of any property (such as real estate, automobiles, jewelry, and artwork)

When dividing your property, it’s important to have two buckets. One is for separate property, and the other is for marital property. As the name implies, marital property belongs to both parties and can generally be split evenly upon divorce. Separate property belongs to just the one spouse and does not need be divided between the couple.

Who is responsible for debt after a divorce?

The flip side of income is, of course, debt. Since net worth is determined by subtracting your debts from your assets, an accurate financial disclosure must also account for whatever debt a couple has. This can be either joint or individual debt. Debt is considered any monies owed, such as credit card debt, personal loans, mortgages, home equity loans or HELOCs, auto loans, or financial-aid loans.

How your discovery goes might be determined by the type of your divorce: is it contested or uncontested? In an uncontested divorce, both spouses agree on the divorce proceedings. But in a contested divorce, the parties don’t see eye-to-eye regarding the specific terms of the divorce. Things that might be contested include how the spouses and children will be treated after the divorce.

In terms of the divorcing parties, they will need to come to an agreement regarding which party will receive alimony (if any) and how much they are entitled to receive. In addition, both spouses need to agree on who will have custody of any children (and whether it will be legal, physical, joint, or sole custody), what the terms of visitation will be, and how much child support will need to be paid (and to whom and for how long). Finally, the parties need to agree to the division of property, including all those debts and assets listed on the financial disclosure.

But what if your spouse withholds information?

If you believe your spouse is withholding records and information – or otherwise provides false or misleading information at discovery – you should secure legal counsel. Our Franklin divorce attorneys can issue an official Request for Production of Documents. The other party’s lawyer is legally obligated to respond to this request, even if it is just to voice an objection. If your spouse is unwilling to comply with the request, there are still some steps you can take to unearth the information.

Your attorney can prepare interrogatories, or a list of specific queries for your spouse. Your spouse and their legal team then have a set amount of time in which they must provide a response (it’s usually within 30 days). Both parties are obligated to tell the truth during discovery, so carefully review any information you provide or receive. If you or your spouse are found to be misrepresenting the facts, you could face fines for perjury or possibly even be sentenced with jail time.

Either spouse may be required to provide their testimony in the process known as oral discovery. During this form of discovery, the party will provide an oral deposition that is then transcribed by a court reporter. As with interrogatories and other forms of discovery, all parties are under oath and must tell the truth in an oral deposition. But what if the desired information is still not exposed by your spouse and their legal team? The court can also issue subpoenas to outside persons or corporations (think: banks or wealth management companies). These non-party witnesses might actually be able to gain access to the documents required, or they might provide their own testimony as evidence.

Why you need a Franklin divorce lawyer

If you’ve ever seen the cover of a tabloid magazine, you know divorce is alive and well. While it may be treated by the media as a commonplace event, going through a divorce yourself is not always so cut-and-dried. The attorneys at the Law Offices of Adrian H. Altshuler & Associates know that uncoupling can turn your whole world upside-down. Even if our clients and their spouses agree on everything (or almost everything), many people are surprised by the complications that come up when separating a household.

Our Franklin family lawyers are here to help you make informed decisions during this challenging time. We’ll help you pick the right path forward and advocate for you the whole way. Our divorce attorneys in Franklin, Columbia, and Brentwood, Tennessee have been practicing family law for 30 years. Fill out our contact form to get your free initial divorce consultation.