People who are going through a divorce or planning to file for divorce might tell you that money is the least of their concerns. Some will say that they want to finalize their divorce cases as quickly as they can so that they can stop feeling like they are in limbo and get started working toward a new normal. Some do not mind taking a major financial hit if it means that they are free to marry the person they fell in love with, the one that persuaded them to leave their spouse.
From the court’s perspective, though, divorce is always about money. In most cases, the court does not care which spouse is at fault for ruining the marital relationship. It only cares about dividing the couple’s marital property and debts in the fairest possible way. Even if clients think that financial disclosures are the least important part of the divorce case, family law attorneys should take them seriously.
Can Couples Finalize Their Divorce Without Filing Financial Disclosures?
Some divorce cases are more complicated than others, but all divorce cases involve financial disclosures. In the context of divorce, financial disclosures are a list of marital and nonmarital assets and debts, plus documentation of each spouse’s income, whether the income comes from employment, investments, retirement pensions, or any other source. The marital property and debts listed on the financial disclosures are what the court divides between the parties in the court order that officially dissolves the marriage and finalizes the divorce.
In an uncontested divorce, the couple submits the financial disclosures attached to the divorce petition. In a contested divorce, financial disclosures are the next step after one spouse files a divorce petition, and the other spouse files a response. In contested divorce cases, the parties may disagree about the value of marital assets or debts and about whether a certain asset or debt is marital or nonmarital. A collaborative divorce is an uncontested divorce where the parties have finalized a property division agreement in mediation before they file the divorce petition. In these cases, the parties attach their financial disclosures, along with the property division agreement and, if applicable, the parenting plan, to the petition for uncontested divorce.
What is the Role of Lawyers in the Financial Disclosures in Divorce Cases?
At first glance, financial disclosures seem like they would be the simplest part of the divorce process, the part where the parties are least likely to need help from their lawyers. After all, isn’t a financial disclosure just a statement of your income, assets, and debts? This is what financial disclosures are, and some people successfully finalize their divorces without hiring a lawyer, but also consider how many people hire accountants to prepare their income tax returns or hire lawyers to represent them in probate court if a deceased relative’s will designated them as personal representative of the estate.
At minimum, your role is to review your client’s financial disclosures before you submit them to the court. Ask your client to provide documentation of his or her income, assets, and debts so you can be sure that the statements are accurate; this will prevent delays in the divorce case. Also ask your client whether his or her spouse is likely to disagree about the value or marital or nonmarital nature of any of the assets or debts. Disagreements over property are a normal occurrence in contested divorce, but ensuring that your client’s financial disclosures can prevent delays before and during divorce mediation.
Financial Divorces in Cases Plagued by Financial Infidelity
The biggest problem that can arise with financial disclosures is when dishonesty about finances leads to the breakdown of the marriage. Your client’s financial disclosures might be the first time his or her spouse finds out the whole truth about the couple’s debts. In this case, you should encourage your client to be transparent in the financial disclosures because the divorce cannot become final without accurate financial disclosures. If it is a high conflict case, you can communicate with the lawyer of your client’s spouse instead of the estranged spouses communicating directly with each other.
You have an even more difficult task if your client’s estranged spouse is the one being dishonest about money. In this case, it is up to you to find out how much property your client’s spouse has acquired during the marriage, and whether the spouse’s justifications for classifying the property as nonmarital will hold up. In the most egregious cases of financial dishonesty, you may have to hire a private investigator.
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