People typically recognize that a divorce is likely to have implications for their financial circumstances. Divorce is expensive on its own and also diminishes the property that someone owns. The need to split assets with a spouse is a major source of stress as people prepare for divorce proceedings.
Oftentimes, there are concerns about fairness, as one spouse might intentionally try to hide assets from the other or misrepresent the finances for personal gain. Such tactics are relatively common, and those preparing for divorce can prepare in a way that reduces their risk of falling victim to financial misconduct. This process often involves collecting financial records before talking about divorce with a spouse. For example, the three types of records below are crucial for an effective evaluation of the marital estate.
Tax and income records
Pay stubs from employers and income tax returns provide important information about the resources that a family has available. It is sometimes possible to identify hidden assets by reviewing tax records and other financial records related to household income. Sometimes, spouses misrepresent what they make in an attempt to retain some of that income secretly.
Spending records, like account statements
Records of how people spend their money are important. In some cases, credit card statements and bank statements may help people prove that their spouse intentionally wasted resources by changing their habits right before the divorce occurred. Other times, people can prove that their spouse used marital income to conduct an affair. A thorough review of household spending records can help better account for household income and offer evidence of financial misconduct.
An inventory of personal property
It is easy to become too fixated on high-value assets during divorce proceedings. A home is obviously worth many times the value of the furnishings within it, but those furnishings are also often marital property. People need to know the extent of the marital estate, including the personal resources of each spouse, if they want to pursue a fair and appropriate division of those assets when they divorce. Even though someone may not want to keep half of their spouse’s wardrobe, they can still claim its value as part of the marital estate as they negotiate property division arrangements.
While many of those financial records are available through discovery, there can be delays or fraudulent alterations to financial records submitted as part of the official divorce process. Those who begin gathering financial evidence before they speak with their spouse about divorce can better trust the accuracy of their records and will not have to wait for their spouse to comply with their requests. As such, properly preparing for the property division process in an upcoming divorce can help people to secure appropriate property division terms.
