Financial Disclosures vs. Financial Discovery in Divorce
Divorce can be a challenging and stressful experience, especially when it comes to financial matters. Two essential components of the divorce process are financial disclosures and financial discovery. To get a fair divorce settlement agreement, you may be required to participate in one or both procedures.
What are financial disclosures in divorce?
Financial disclosures are vital to the divorce process. Each person must provide a full and accurate accounting of their finances. This includes their assets, debts, income, and expenses.
Why is this required? The purpose of financial disclosures is for each person to fully understand their spouse’s financial situation. With everything out in the open, negotiation is easier and more fair.
Who is required to complete financial disclosures?
In every state, spouses must share financial disclosures unless both people agree to waive the requirement.
To do this, each person must complete a financial disclosure form. This form prompts a detailed listing of income, expenses, assets, and liabilities. The level of detail required varies by state, but in most cases, it must include bank statements, tax returns, credit card statements, and more.
The financial disclosure is not filed with the court. It's provided to the other spouse or their lawyer.
7 tips for a successful financial disclosure process
- Start early. Don't wait until the last minute to start gathering your financial information, which may include pay stubs, expense declarations, information from retirement accounts, and anything else required for full financial disclosure.
- Be honest. It’s sensitive information, but you need to provide an accurate and complete accounting on your financial disclosure form.
- Organize your documents. Keep your financial records organized and easily accessible.
- Seek professional help. Consider hiring a financial planner or accountant to help you navigate the process.
- Understand your state's requirements. Make sure you understand what is required to complete your financial disclosure form.
- Don't hide assets. Trying to hide assets is not just unethical. It's also illegal.
- Review the form carefully. Before submitting your financial disclosure form, review it for accuracy and completeness.
What is financial discovery in divorce?
Financial discovery is a legal process that allows each party to obtain information from the other party related to their finances. This process typically involves a request for documents or answers to written questions, known as interrogatories.
The purpose of financial discovery is to obtain additional information that was not provided in the initial financial disclosure process.
Who is required to go through financial discovery?
Financial discovery in divorce is not usually a required step in the divorce process. Although not always necessary, it can be an essential component in some cases.
If you suspect your spouse may be hiding assets or income, or if you can't agree on how to divide your assets or other marital property, financial discovery can help you obtain the information you need to make informed decisions.
Tips for a successful financial discovery process
- Understand the purpose. Make sure you understand why the financial discovery process is necessary and how it can benefit you.
- Be prepared. Start gathering your financial documents and information early in the process to avoid stress and delays in your divorce case.
- Start gathering your financial documents and information early in the process to avoid delays and stress.
- Be honest. Provide accurate and complete information in response to interrogatories and document requests.
- Work with a divorce attorney. An experienced family law attorney can help guide you through the financial discovery process and ensure that your rights are protected.
- Don't procrastinate. Respond to requests for information or documents in a timely fashion to avoid delays and potential legal consequences.
- Review everything carefully. Make sure you review all documents and responses for accuracy.
- Understand the rules. Make sure you understand the legal rules and requirements related to financial discovery, so you can comply with them properly.
Differences between financial disclosures and financial discovery
The primary difference between financial disclosures and financial discovery is that financial disclosures are mandatory, unless waived, and financial discovery is optional.
Both processes involve the exchange of financial information, but financial discovery is typically used when one party suspects that the other is hiding assets or income.
Another key difference is that financial disclosures are completed by the parties themselves, while financial discovery involves requests for information or documents from the other party.
If you’re dealing with the divorce process and have questions, we can help. Schedule a free 15-minute phone call with an account coordinator here. We offer a variety of flat-rate divorce-related services, from online divorce plans to one-on-one time with an advising attorney.