Dividing marital property is part of the divorce process. Gathering and sorting through the records for all your financial assets can be a slow and sometimes painful exercise. But it’s an essential step to ensure you leave the marriage with a fair settlement.
Read on to learn what kind of financial information you have to share, why it’s required, and when you might be able to speed up the process.
What Are Financial Disclosures in a Divorce?
Although the rules on property division in divorce vary somewhat from state to state, both spouses must exchange some financial information early in the process. These financial disclosures are required to make sure that each of you has full knowledge of the other's financial circumstances. This generally includes sharing important financial documents, such as:
- mortgage statements
- bank statements
- credit card bills
- tax returns
- pay stubs, and
- brokerage account statements.
Many states require you to fill out and exchange official financial “disclosure declaration” forms. In California, for example, the forms that divorcing spouses must complete include a Declaration of Disclosure, Income and Expense Declaration, and Schedule of Assets and Debts.
Your financial disclosures give the judge the information needed to ensure a fair division of the “marital estate” (the property and debts you and your spouse obtained during the marriage). The judge may also use this information when deciding on issues like alimony (spousal support) and child support.
What If My Spouse and I Don’t Want to Exchange Financial Documents?
There are ways to minimize paperwork in your divorce, but refusing to provide financial documents isn’t one of them. Each spouse’s income, expenses, assets, and debts are highly relevant during a divorce.
Even when you and your spouse want to work out a divorce settlement agreement, the financial disclosure requirements are meant to ensure that your agreement is fair. A judge will also need this information in order to decide whether to approve your agreement or—if you haven't reached a settlement—to make independent, fair decisions about property division and support.
Will a Judge Accept Limited Financial Disclosures?
There’s hope for couples who don’t want to sift through mountains of financial paperwork.
In some states, when couples are able to reach a settlement, a judge might accept a limited amount of financial information. For example, you and your spouse might need to submit only a few paystubs, tax returns, and possibly bank statements with your settlement agreement, as long as you attest that each of you has a full understanding of the other’s income and assets. To finalize your settlement and enter it as a divorce decree, the judge will simply review these items to verify income amounts.
Also, some states may allow you to waive repeated disclosure requirements near the end of the divorce process, as long as you've already exchanged your full financial information and have kept each other updated on any changes. In California, for instance, you and your spouse may agree to waive the final disclosure declaration if you've provided the preliminary disclosures, have added to those disclosures to reflect any subsequent changes, and have exchanged current income and expense forms. (Cal. Fam. Code § 2105(d) (2014).)
Understanding Your Financial Disclosure Requirements
Although financial disclosures can be a lot of work to put together, they’re intended to protect you in a divorce. A judge might waive certain financial disclosure requirements if you and your spouse both agree to the waiver and are able to reach a divorce agreement on your own. But that isn’t always the case.
If you're unsure about the disclosure requirements in your case, you should consider consulting a good family law attorney for advice. Also, if your spouse isn't being forthcoming with the disclosures, you may need a lawyer's help to force your spouse to provide the required financial information. Learn how to select a good family lawyer.