One spouse often handles most household finances – everything from overall expenses to investments to financings (e.g., the new car) to managing tax returns. In a divorce, this often puts one party at a distinct disadvantage. Worse, sometimes one spouse may not have any concrete knowledge about overall income, how many assets are owned, or where investments are held. What should the financially unknowledgeable spouse do under these circumstances in a divorce?
First, recognize that this information should be fully understood before accepting any settlement or proceeding to trial. Frequently, the spouse with financial knowledge may propose a “reasonable” offer trying to head off full disclosure of income or assets. That same spouse may also delay disclosing information in the hopes it will be too late to enter as evidence at trial. Either way, the “reasonableness” of any settlement or potential judgment cannot be determined without knowing all the financial facts. Too often, the spouse lacking financial knowledge may wish to forgo learning everything since they want to quickly end the divorce and/or dealing with their soon-to-be ex-spouse. This impulse must be resisted.
Second, the discovery of financial information should be sought on a timely basis. This is partly due to the formal and sometimes lengthy discovery process which consists of requests to produce (submission of documents for inspection), interrogatories (a series of questions), requests for admissions (written denials or admissions to pointed questions), subpoenas (requests for testimony or production of documents by third parties), and/or ultimately depositions (testimony).
More importantly, gathering financial information may lead to additional discovery requests. For example, a bank account transaction may show payments to an unknown credit card (which may indicate marital dissipation – e.g., taking funds from the marriage for solely personal use, oftentimes for an affair), to an unknown brokerage account (evidencing additional assets), or to an unknown party (which may indicate either marital dissipation or additional assets). To the extent more information is needed, more time may be required for additional discovery and analysis.
Third, a spouse must attempt to personally gather all information legally available from the knowledgeable spouse, especially if any suspicion of marital dissipation or hidden assets exists. With the possible exception of work product from the spouse’s employer or privileged information shared with an attorney, any and all financial records at home should be copied or secured in order to be copied. This includes electronic information stored on or accessed by personal (non-work owned) computers. As these documents or assets holding the documents (e.g., computers) are owned by the marital estate, each party has an equal right to them. Despite any intimidation by the financially knowledgeable spouse (e.g., calling the police) towards the other, this is legal (and the police will recognize this). While many spouses loath to undertake these efforts, they are critical and will save time and money in the formal discovery process – and it may lead to information which would not be learned in discovery.
Fourth, use subpoenas extensively. Since subpoenas are fairly low in cost to issue, they are an excellent tool to cast a wide net in gathering information. Subpoenas should be used to both gather information as well as to verify information provided by the opposing party (which may be doctored). Any and all organizations (or individuals such as accountants) which may possess – or are reasonably thought to possess – financial knowledge of the marital estate should be subpoenaed. Was a loan application (which could contain valuation information) submitted to a financial institution for a house, car, or other asset/need? Is the other spouse a partner or owner in a business? Are there any financial institutions which are nearby or have a historical (but supposedly not current relationship with the spouse? All of these situations likely warrant the issuance of a subpoena.
Fifth, consider hiring a forensic expert. Spouses lacking knowledge of financial matters typically do not have financial experience. So, depending on the complexity of the marital estate and the volume of information discovered, the use of a forensic expert may be warranted. These experts can investigate and calculate unknown or dissipated assets. However, using them can be costly and must be weighed against the value of assets proven to exist or to have been dissipated.
All of this financial information is necessary for your attorney to properly and fairly evaluate your case, negotiate a fair settlement, and/or form the foundation of arguments and evidence presented at trial. The saying “knowledge is power” is perhaps nowhere more applicable than in divorce.
