“No matter how a couple shares financial information during their marriage, in a divorce, both people have the right to be fully informed.” – Theresa Beran Kulat, Collaborative Lawyer & Mediator, Founder of Trinity Family Law
Married people combine their money – some consciously, some unconsciously. Some couples share information; some divide the labor of money management. For example, I often see families where mom manages household bills and dad is in charge of investments. Attitudes toward money color how “money conscious” or “money clueless” a person is.
So, when a marriage breaks down and a couple is facing a potential divorce, all of their patterns get activated. Their practices of sharing information come to the forefront. In contested litigation, hundreds of hours and tens of thousands of dollars are often spent fighting over what information needs to be shared with “the other side.” Obfuscation can occur: one side bombards the other with so much information – papers, statements, boxes of irrelevant stuff – to hide needles in endless haystacks. This means it is virtually impossible to see the forest for the trees.
We take a solution-focused approach at Trinity Family Law. Generally, our clients intend to settle their cases. Our goal is to make sure both people have sufficient understanding of the assets, debts, incomes and expenses of the family – whether we serve as mediators or represent one person. With that as a foundational commitment, financial disclosure can look a variety of ways.
No hiding. Most information is readily available – pay stubs, tax returns, bank statements. We expect our clients to disclose everything.
Just because it is disclosed, doesn’t mean it must be shared. On more than one occasion, I’ve had clients with non-marital assets that the other spouse did not know about. The law is fairly clear: gifts and inherited money that you keep in your sole name are not considered “marital.” Those funds, however, still need to be disclosed. Only marital funds get divided. So, the non-marital funds are “safe.” The amount of non-marital money, its liquidity and its size relative to the marital estate are all relevant when determining how to divide the marital funds.
The degree of disclosure needs to satisfy the decision maker. Clients who want an outside, third party (Judge) to make decisions need be prepared to spend more time, energy and money on the disclosure process. The expense of litigation is driven in part by the time it takes to educate someone (i.e., the Judge) who knows nothing about a family. If two spouses have kept each other in the dark and trust levels are low, the cost of getting financial disclosures to a point of parity can be outrageous.
Our client-centered approach means that the type and amount of document production will depend on the client’s level of sophistication and trust. Low conflict spouses who have been transparent throughout their marriage can choose a divorce process like mediation or Collaborative process that supports them in reaching their own agreements. In those situations, the financial documentation that the professionals need is much less. You still need to provide proof of the numbers. Even low conflict couples who trust each other need to provide basic documents like tax returns and bank statements. Most couples are between these two extremes.