Protect Yourself by Learning About Your Family’s Finances


All too often, clients enter the divorce process with little or no knowledge about the family’s bank and investment accounts, stocks, retirement assets, ownership of real property, and debt. If you recognize that you and your spouse are on the verge of divorce, one of the most important steps you can take is to understand your family’s finances. It is also extremely important that you retain an attorney who can assist you in obtaining as much information as possible about marital assets so that you have all the information necessary to protect your financial interests.

When seeking information about marital assets and income, you and your attorney may want to consider some of the following methods:


 


  1. Propounding document requests to your spouse or his or her attorney requesting that financial documents be produced within the time frame required by the applicable rules of civil procedure in the jurisdiction where you are getting divorced. Among the many documents that may be necessary for understanding your family’s finances are tax returns, pay statements, bank statements, retirement account statements, and documentation pertaining to any businesses your spouse owns.

  2. Propounding interrogatories, which are questions posed to your spouse that require him or her to provide answers about income, assets, and any other information relevant to your case.

  3. Requesting that the court compel your spouse to produce financial information if he or she refuses to respond to discovery requests or provides deficient responses. In some jurisdictions, the court may impose sanctions if a party does not engage in the discovery process in good faith.

  4. Issuing subpoenas to banks and other financial institutions to obtain documents containing information about marital income and assets.

  5. Taking depositions of persons and financial institutions in possession of documents or knowledge of marital assets and income.

  6. Hiring a skilled forensic accountant to review documents and assist in identifying hidden assets and income.


Financial information must be obtained in advance of the trial in your case or you may be deemed to have waived your right to obtain that information. For that reason, anyone planning to divorce should consult with an attorney as soon as possible and design a strategy to gain a full understanding of the family’s finances.

Even if divorce is not imminent, or not even being considered, you should still begin trying to understand your family’s finances because that information will ease the confusion and lack of certainty that may arise should your spouse die. At a minimum, you will want to understand how much income is necessary to meet the family’s expenses. It would also be helpful to know if you are the beneficiary of any insurance policies and whether you stand to receive any retirement assets in the event of your spouse’s death.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.


 


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