THE NEED FOR ACCURATE RECORD KEEPING IN DIVORCE LITIGATION
The breakup of a marriage often has many difficult emotional and financial consequences. It is frequently a time of sadness, anger, uncertainty and even fear of the unknown. While many of those feelings are inevitable as long term relationships change, some of those feelings, at least regarding financial issues, can be avoided or minimized with adequate and smart record keeping. More often than not, when I represent a spouse facing the dissolution of a long term marriage, I learn that one of the other of the spouses held the role of financial planner and record keeper during the entire marriage. Often, the other spouse went along with financial decisions and sometimes, did not even know the financial decisions made during the marriage. As a case in point, I recently represented a 40-something year old wife in a 15+ year marriage, who worked and contributed to the financial well-being of the parties throughout the entire marriage, but who gave her paycheck to her husband and let him “pay the bills and handle the finances.” Other than her own retirement plans at work, this wife faced the prospect of divorce without knowing many of the financial decisions her spouse had made for her and their children during the entire marriage. Not only did she not participate in decisions as basic as investing for the children’s education or taking out home equity loans to pay for expenses on the house, but she did not know what decisions had been made over the past 15 years and worse, she did not know where the financial records of those decisions were kept. The answer, “My husband (or wife) used to handle all that financial stuff,” is a scary proposition when that spouse is no longer in the picture and often has interests that are adverse to his/her estranged spouse. The issue of equitable distribution of assets and debts cannot be resolved fairly if only one side knows and understands the marital assets and debts.
While these financial records must be disclosed to both parties and their counsel during divorce litigation, the discovery process does not occur before decisions are made regarding divorce litigation and it does not quell the uncertainty that the non-knowing spouse has when deciding whether to proceed with a divorce or what settlement positions to take prior to litigation. The lack of knowledge puts the non-knowing spouse at a real disadvantage at pre-litigation negotiation and often increases the expense of litigation when these items must be disclosed through discovery, especially from a non-cooperative estranged spouse. This uncertainty and extra expense can be avoided by each spouse taking simple steps in record keeping especially in the months and possibly years leading up to a dissolution of a marriage. While it is unrealistic to think that a married couple would change the dynamics of their long term relationship to have both parties participate in financial decisions just in case they ever have to consider divorce, it is not unreasonable for both spouses to familiarize themselves with marital financial decisions, and how and where copies of important financial records, such as tax returns, year-end retirement and investment account statements, mortgage balance statements, auto loan statements, inheritances and gifts and credit card and other debt statements are kept. These statements need not be kept on a monthly basis or quarterly, but should be kept on an annual basis. Although accurate record keeping by both spouses will not eliminate the stress and difficult emotions that come with the breakup of a long term marriage and the difficult issues of custody and parenting time, access to accurate and available financial records for both parties will help to level the playing field and will help eliminate some of the uncertainty and fear that each spouse will face going forward.
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