Why Is Full Financial Disclosure So Important in a Divorce?
Financial topics can be complicated, and in many marriages, one spouse may not have a full understanding of their financial state. For example, if one spouse handles the taxes that year, the other may be oblivious to a few debts or additional funds and investments. While this unseen information may seem inconsequential when the funds are shared, when a couple is divorcing it becomes extremely important that both spouses have a full understanding of their financial situation.
The need for financial transparency
In a divorce, it is vital that both parties be completely transparent about their financial state as it pertains to marital assets and individual properties. In fact, when you and your spouse begin the divorce process, the court requires both of you to submit a formal document pertaining to your finances called a Financial Declaration.
The Financial Declaration will list the entirety of your assets and debts accumulated during and prior to your marriage and whether they were acquired together or individually. Courts collect this form to see an accurate representation of the financial state of the couple as a unit and of each person individually to determine settlements fairly. If one or both spouses do not disclose all of their financial information, it could lead the court to make unfair decisions about alimony payments, child support, and division of assets.
If you have complex assets such as a business, investments, intellectual property, stock options, real estate holdings, etc. you should discuss with your attorney the best way to value that property and income for financial disclosure. Your attorney can recommend experts such as forensic accountants and professional valuators to facilitate the process.
The consequences of omitting financial information
People may omit information about their finances for any number of reasons. The form is lengthy and taxing, and it’s quite easy to become lazy, leading to guess-work and misinformation that could get you into trouble. Others simply believe nobody should have access to that type of information about their financial life and will cherry-pick what information they are comfortable sharing. Some spouses attempt to hide certain assets in hopes of keeping them from being divided in the divorce. Regardless of the reason, it is vital that you give full disclosure or you may suffer serious consequences.
If your spouse or his or her attorney suspects your financial documents are incorrect or something has been omitted, they may ask to see the documents. While you may delay this, it is likely the court will allow your spouse to see your Financial Declaration, and any discovered deceptions could hurt you in court. It is illegal to lie on your financial documents, or any documents that appear before the court, and the judge may see fit to punish you for lying as a crime. The court may also decide to reward your spouse more money or property because you withheld information unfairly, which would likely put you in a worse state than if you had told the truth from the start.
In addition to being honest in court, it is also equally important, if not more so, to be honest with your attorney about your financial situation. Your lawyer was hired to help you, and without all necessary information, they will be unable to serve your needs to the fullest. At McKinley Irvin, we always encourage full disclosure and help our clients collect and compile all of their financial details so that we can ensure their finances are handled appropriately. Our firm will review your important documents pertaining to any debts, expenses, income, insurance policies, investments, businesses, retirement accounts, and the like. With our lawyers on the case, you can rest easy knowing your financial declaration documents will be accurate and comprehensive.Contact McKinley Irvin in Oregon to discuss your financial disclosure documents with our divorce lawyers.