If I Have Been Left in The Dark On Finances During My Marriage, What Should I Do to Prepare for Divorce?
While divorce can be challenging for anyone, it is especially hard for spouses who have been left in the dark when it comes to finances, assets and investments. Given that 40 to 50 percent of all marriages end in divorce, is especially important that these individuals proactively take steps to navigate their finances and investment portfolios even before they pursue divorce. In fact, as soon as divorce becomes even a possibility, vital information needs to be gathered so that they can be well-informed and confident in moving forward.
The Most Important Three Documents
Well there will be a number of documents that are vital to collect in order to be as well informed and prepared as possible for the divorce process, there are three in particular that are absolutely essential to have in-hand in order to ensure that any settlement decisions reflect your best interests. These include:
- A lifestyle analysis, which we will discuss in greater detail below;
- The net worth statement, which we will also discuss in greater detail below; and
- Tax returns.
Your tax returns in particular provide a wealth of information. You should have access to at least the last three years of returns, as well as any supporting documents that go along with those returns, such as W-2 and 1099 forms. If you do not currently have access, you should either get them through your tax preparer or submit a form 4506 to the IRS to obtain a copy.
Note that, if there has been ownership in a privately-held business, gaining access to financial information can be more complicated, however, it is essential, especially if any personal expenses have been paid through the company.
A lifestyle analysis helps you determine what your expenses were both before and after divorce. In coming up with the analysis, it is crucial that you be as all-inclusive as possible. This includes any one-time expenses that may turn into recurring expenses, as underestimating your expenses in general could completely derail your plans.
Know that there are now online tools to help simplify collecting this data, such as online expense trackers, which streamline the process and link directly to your account in order to pull the necessary information. In addition to using these, make sure that you secure at least three years’ worth of your bank and credit card statements, as you will not only want to determine past and current spending, but also future.
Net Worth Statement
While the lifestyle analysis helps you understand your spending, the net worth statement essentially tallies your assets and liabilities. This will be helpful, as the court will eventually require a financial affidavit in order to obtain an assessment of you and your spouse’s current financial situation, which includes assets, expenses, income, and liabilities. As part of this process, you will not only need support documents concerning banking, investment, and savings accounts, but any employer-sponsored retirement plans as well. The internet can be helpful in finding out about any retirement plans or may not already know about.
Not only will you need to run a credit report in order to help determine your liabilities and any outstanding debts, but make sure that you also check for any assets that might be difficult to value, such as art, antiques, and other collectibles; as well as anything potentially kept in a safety deposit box.
We Are Here For You
Well this may seem overwhelming, know that there are professionals, such as experienced divorce attorneys, whose job it is to help simplify and guide you through the process. Contact our experienced Orlando divorce attorneys at Arwani Law Firm, PLLC today to find out how we can be of help to you.