Divorce is a multifaceted and difficult process. One of the most contentious issues in any divorce is financial disclosure. While every state has different laws concerning property division in divorce, it is always necessary to perform a complete and accurate financial disclosure when you divorce. It’s crucial to understand the importance of financial disclosure, what to expect from the process, and the potential consequences for failing to provide a complete and accurate financial disclosure.
What Is Financial Disclosure in Divorce?
One of the most important elements of divorce is the division of marital property. Most states uphold equitable distribution laws, while some enforce community property statutes. Regardless of your state’s law for property division, you and your spouse will both need to submit financial disclosure statements in the divorce process. Your financial disclosure must include a complete list of all of your assets and property. Typically, divorcing spouses can retain ownership over their separate personal property, but they must divide their marital property according to state law.
Financial disclosure ensures both parties are as transparent as possible to ensure a fair and reasonable property division in divorce. Whether the couple decides to litigate their divorce or explore alternative dispute resolution like mediation, they will need their financial disclosure statements to complete the property division process.
What Should My Financial Disclosure Statement Include?
When you must provide financial disclosure in divorce, you essentially must provide records for all of your financial assets. This includes your home and other real property, vehicles, investment accounts, retirement accounts, bank accounts, and a complete list of all of your debts. Property division in divorce also includes debt division. Just like divorcing spouses can retain ownership over their separate property, they also retain responsibility for separate debts they brought into the marriage. Any debts incurred during the marriage typically remain the shared responsibility of both spouses.
Working with an experienced divorce attorney is the best way to ensure your financial disclosure includes all required information. They can help you determine which financial records you must produce and assist you in gathering all of the documentation you must include with your financial disclosure statement. If you suspect that your spouse has been untruthful with their own financial disclosure in any way, your attorney can help you address this kind of situation as well.
Separate Vs. Marital Property
Completeness and accuracy in financial disclosure benefit both parties in divorce. Your financial disclosure statement should include a list of all your separate property, such as assets you owned before marriage, inheritance you received from blood relatives, and gifts. A complete list of separate property will ensure that your separate property is not subject to division in divorce.
Financial disclosure is also necessary for defining a divorcing couple’s marital property. This includes the assets and property subject to division under state law. In a community property state, marital property is divided equally, with each spouse receiving 50% of their marital property when they finalize their divorce. In equitable distribution states, the divorcing spouses may have a different allocation of marital property that is not entirely equal but more equitable considering each of the spouse’s individual needs and financial situations.
Hiding Assets in Divorce
One of the biggest mistakes anyone can make in the divorce process is attempting to hide assets in property division proceedings. Some divorcing spouses may attempt this out of spite or simply out of a desire to protect their own interests. Regardless of the intention, hiding assets from property division in any way can result in severe penalties, up to and including criminal prosecution for fraud.
If you suspect that your spouse has hidden assets, it’s vital to bring your suspicions to your attorney’s attention as soon as possible. An experienced divorce lawyer can help you determine the best solution to this kind of situation, which may include working with a forensic accountant who can help you uncover the paper trail that will reveal your spouse’s hidden assets.
If the family court judge overseeing a divorce case discovers that one of the spouses attempted to hide assets to shield them from property division, it will likely influence the judge’s final decision on the divorce. The party who engaged in financial record obfuscation will likely receive less marital property in an equitable distribution state. A judge may also compel them to pay a higher alimony rate to the other spouse, and additional financial penalties are possible depending on the severity of their behavior.
How Can an Attorney Help?
Divorce is a stressful and complex situation, even when divorcing spouses are agreeable about the decision to end their marriage and are relatively civil toward one another. Many divorces are emotionally driven, and it’s vital for divorcing spouses to remain as objective as possible when it comes to the practical elements of the divorce process. If you are uncertain of how to approach your divorce case, whether you are concerned about property division or other elements of the process, hiring the right attorney to represent you can make a tremendous difference in the outcome of your divorce.
An experienced attorney can not only handle the procedural requirements of your case but also provide additional services that streamline your divorce process. This may include working with expert witnesses like tax professionals, forensic accountants, and private investigators to ensure an accurate and transparent property division determination. They can also help their client take advantage of the benefits of alternative dispute resolution so they can avoid the stress and expense of divorce litigation.
If you are preparing to divorce, it is natural for the emotional side of the issue to interfere with your ability to objectively assess the practical side of the divorce process. Working with the right attorney is the best way to handle financial disclosure in divorce, whether you simply need help gathering the records you must produce or suspect your spouse has not been entirely truthful with their own financial disclosure. Contact a reliable divorce attorney as soon as possible to start working on your financial disclosure for divorce.