- What is financial discovery in divorce?
- Is it always necessary?
- What is the process like?
- How long does it take?
- What information must I provide?
Financial discovery in divorce is all about information gathering – specifically, the gathering of financial information. This is important in some divorces to make sure one spouse isn't hiding money from the opposing party in an attempt to get a larger share of the marital assets.
What is financial discovery in divorce?
Financial discovery in divorce is one of the most important steps in the divorce process, and it can lay the groundwork for further negotiations. During a period of time called the discovery phase, both parties are permitted to request financial information from each other that may be relevant to their case.
The divorce discovery process typically includes gathering records such as bank account statements, investment account statements, tax returns, credit reports, business records, and any other documents related to either party's finances. It also includes gathering written or oral testimony from witnesses who may have knowledge of the couple's financial matters.
The goal of financial discovery
The goal of financial discovery is twofold. First, it allows both parties to gain an understanding of the other's assets and liabilities. Second, it gives them an opportunity to prepare for negotiations over support payments, child custody arrangements, and the division of marital and perhaps even personal property.
During this process, each spouse will not only learn how much money the other has available but also what type of income they have and any debts they may have incurred. This information can be used to determine an equitable property division or spousal maintenance when it comes time for settlement negotiations.
Is financial discovery always necessary in divorce?
No. While financial disclosure documents are required in most divorces, financial discovery is not always necessary. If you and your spouse agree on all terms of your divorce, you may not have to produce documents for one another, instead skipping this phase.
Financial discovery is a necessary part of divorce proceedings when spouses can't agree on how to divide marital assets or when one spouse suspects the other may have hidden assets or income. It's a fairly common part of the divorce process and an important step for both parties to understand their financial situation and protect their rights.
What does the financial discovery process look like?
Financial discovery typically begins with the production of documents. Both spouses exchange financial documents that provide information about their net worth, current and prior jobs, any investments they have made, and other records that prove their income level. This phase usually takes time because each party must gather all relevant information before presenting it to the other side.
In addition to exchanging paperwork, the financial discovery process often requires interrogatories (a series of written questions) between spouses. These questions help each person learn more about what they are entitled to in the divorce settlement. Through questioning, each person gets detailed information about the assets and liabilities of the other.
How long does financial discovery take?
Financial discovery can take weeks or even months. It depends on how much information must be exchanged in a particular divorce case and how cooperative each person is when asked to provide complete responses.
What information must I provide for the discovery process?
Each spouse must provide a variety of documents and other items to their partner or a neutral third party. Discovery requests typically include the following:
• Financial documents such as bank statements, tax returns, pay stubs, credit card statements, and mortgage loan documents
• Retirement accounts such as pensions, IRAs, 401(k)s, and annuities
• Employment records such as job histories and pay stubs
• Investment accounts such as stocks, bonds, mutual funds, ETFs, and options
• Property deeds and titles for all real estate owned by either spouse
• Lease agreements for any rental properties owned by either spouse
• Business records related to any businesses owned by either spouse
• Insurance policies for health insurance coverage of either spouse or their dependents
• Life insurance policies held by either spouse on the life of the other spouse or any minor children involved
• Any trusts held by either spouse or jointly held between both spouses
• Any additional assets held solely in one person's name or jointly between both spouses (including artwork collections or antiques)
• Statements associated with loans taken out in the name of either spouse or jointly between the spouses (such as student loan debt or car loans)
Financial discovery can help both spouses understand and agree upon what’s fair when it comes to alimony/spousal support, child support, the division of retirement accounts, and more.
Can Hello Divorce help me avoid going through financial discovery?
Hello Divorce provides non-divorce lawyer assistance to couples going through a divorce. We do this because we have the legal knowledge needed to help clients get their divorce cases resolved, and we know from experience that not all divorces require the intervention of a law firm or an expensive divorce attorney. Much of the work can be handled at a far cheaper rate, which goes hand-in-hand with our flat-rate online divorce plans and services.
To help couples end their marriage quickly and equitably, Hello Divorce also offers mediation services. During mediation, you are paired with a neutral mediator who helps you and your spouse negotiate the terms of your divorce settlement. If mediation is successful, the hassle of financial discovery may not be necessary.
To learn more about the many online divorce plans and services we offer, please schedule a free 15-minute call by phone.
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