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Preparing for Divorce: Step 2 - Make an accounting of the family finances

By Jennifer Rice, Esq.

Here is the second post in a series about preparing for divorce. Divorce attorney Michael Sherman of the Alabama Family Law Blog has tips on family finances. I've added my comments in italics.

Preparing for Divorce: Step 2 - Make an accounting of the family finances

Step 2: Make an accounting of the family finances
The next thing you will want to do is to gather as much information as you can in order to get a clear picture of your family?s financial situation. You may already have a firm handle on this, if you are the one that takes care of the finances in your home. On the other hand, you may have no idea what you and your spouse own or owe. You may be the one who pays the bills, tracks the debts, and knows where the tax returns are. If so, great. If not, you?ve got some work to do.

One of the primary functions of the divorce process is to make a division of the assets and debts of the marriage. In order to get a fair division, you must know what there is to divide. In Colorado, marital property (assets and debts) are to be divided equitably. Although this does not necessarily mean equally, the Courts tend to divide things equally (50/50).

This is a three step process:
A. Determine what you own.
B. Determine what you owe.
C. Determine income (both yours and your spouse's).

What you are doing -- figuring out what you own, owe, and have as income -- is the same thing that your attorney and/or the Court will be doing during your divorce or legal separation. Whether you are using an attorney or not, this process is important because you will be going from a two-spouse household to one spouse household and you'd better know how you are going to manage and what items need to be divided up.

In Colorado, as part of the divorce, you will be required to prepare a Sworn Financial Statement, Supporting Schedules, if applicable, and exchange documents with the other Party. You can find a copy of the Sworn Financial Statement (JDF 1111) at the Colorado Court's website. The form is available in auto-calculating Microsoft Word format, Word, and Adobe Acrobat. Use the auto-calculating version, it will save you some brain cells.

As part of the "disclosures" you will also have to provide documents regarding:

• Retirement Plans
• Income Tax Returns (most recent 3 years)
• Bank/Financial Institution Accounts
• Personal Financial Statements (last 3 years)
• Income Documentation (Pay Stubs, etc.)
• Business Financial Statements (last 3 years)
• Employment and Education ? Related child care documentation
• Real Estate Documents (Appraisal, Title, etc.)
• Personal Debt (Loans, Title, Credit Card Statements, etc.)
• Insurance Documentation
• Investments
• Extraordinary Children?s Expense Documentation
• Employment Benefits

After seeing this list, clients always ask "do I really have to give them all this information?" Yes. The Courts have no idea how the Parties shared information during the marriage and they want to make sure that the Parties are on a level playing field. So they will force you to exchange the information. There is not a legal way to "opt out" of providing the disclosures unless the Court allows it -- which rarely happens. "I don't have it" is not really acceptable either. You are required to get information that you reasonably have access to -- for example, bank statements, credit card statements, etc.

Full post as published by Colorado Family Law Blog on March 30, 2007 (boomark / email).