Why it is so important to gather financial documents when planning divorce

Thinking you might be divorcing or already planning divorce? One of the worst positions you can be in when you are in the divorce process is having no access to the financial documents and being in the dark about your income and investments.

What happens if you are the spouse who doesn’t have access to financial documents? Your attorney will bill lots and lots of time requesting documents from your spouse’s attorney. Deadlines will be missed and/or information will drip, drip, drip out. Some documents may be withheld altogether to hide assets. Is this against the rules? Yes. Does it happen? Yes.

Meanwhile, you have no idea what your financial situation is. You may also be in the unfortunate position of not having access to money, so the process of getting financial information bleeds you dry of every financial (and emotional) resource. Often the other spouse stops support payments, knowing he or she has you over a barrel financially. You may have no choice but to settle, often in the dark about the true financial picture.

Financial documents you need to gather

When clients retain me to help them settle their divorce and divide assets and debts, these are the documents I will initially ask for so I can perform a thorough analysis:

    1. 3 years of tax returns with all supporting schedules and W-2s
    2. At a minimum last 3 month’s statements on all investment accounts
    3. At a minimum last 3 month’s statements for all bank accounts, checking and/or savings
    4. Most recent three statements from any employee retirement plan, pension, or deferred comp plan
    5. Most recent statement on any Employee Stock Option, Employee Stock Purchase Plan, or Restricted Stock accounts.
    6. Most recent mortgage statement
    7. Most recent pay stubs for each party
    8. Last 3 month’s statements for any and all credit cards with balances.
    9. Copy of most recent statements for any outstanding loans.
    10. Policy statements or information on any and all life insurance, annuities, or cash value insurance
    11. Social Security estimate statements for both parties. These are available at www.SSA.gov
    12. For any businesses owned, a full Profit and Loss Statement for current and previous years
    13. Most recent insurance policies for all autos owned that show VIN numbers. Write in current mileage on vehicle

Keep copies at a second location

If you are thinking of divorce or planning divorce, then it’s possible that your relationship could take a turn for the worse at any time, so do not delay gathering documents. You don’t want to come home some day to find your spouse, belongings and the financial documents gone!

Ideally documents should be saved as PDFs on your computer and saved on a flash drive which you leave with a trusted friend or family member or at work. Hopefully you can quietly gather documents but you may need to ask for the records. There is no need to go further than explaining that you have a desire to learn about your finances and be involved. If your spouse doesn’t provide documents before you split up, can you imagine what it will be like after you split up? Besides, it truly isn’t a bad idea to scan your important financial information and keep that offsite. Your house could burn down!

And remember, call a CDFA BEFORE you hire an attorney. Having been smart and gathered all the financial documents you need, you won’t be in the position to need the power of the court to get those documents from your spouse. You will be in a better position to negotiate and settle your divorce.