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Top 10 Things Attorneys Need at the Start of Matrimonial Action

After children, financial matters are often the most difficult thing to address during a divorce. Gathering important financial documents at the start of a divorce proceedings can help lower the stress and confusion for counsel and their clients. To help you through the process we have compiled the list below:

#1 Certified Copies of Business & Personal Income Tax Returns

Most tax preparers utilize computer software to prepare income tax returns; this produces three different versions of the tax return: the government (or filing) copy, the client copy, and the preparer’s copy.

The filing copy is the version that includes only those forms and schedules that are required by the taxing authorities. The client copy includes the filing copy plus other supporting schedules that the software creates. The preparer copy includes all schedules, summaries, calculations, and analytics prepared in conjunction with the tax return. Generally, one should request copies of the preparer copy, since this version is all inclusive and contains valuable information. In many instances, you may also request a certified copy from the taxing authority so that you can compare what has been filed to the copy that you have been provided. Certified copies of federal income tax returns can be obtained by submitting Form 4506.

#2 Insurance Policies

Insurance policies are a great source of information. Commonly, these include, but may not be limited to: life, homeowner’s, personal property, motor vehicle, health, annuities, accident, and liability. In addition to confirming the existence of assets, these policies are also helpful to identify assets not already known. Insurance policies may provide additional information such as location, title, ownership, and encumbrances. In some instances insurance policies will also identify market values of jewelry, art, memorabilia, and antique collections.

#3 Safe Deposit Boxes

Safe deposit boxes are used to store valuables such as jewelry, artwork, and family heirlooms. At other times safe deposit boxes are used for more mischievous purposes, such as hiding unreported cash or illegally obtained items. An inventory and even photographs of their contents are essential. Often, safe deposit boxes are kept near the home or business. It is a good idea to inquire with banks utilized by the parties to help identify undisclosed depositories.

#4 Passports

Whether the parties travel internationally for business, pleasure, or both, passport stamps help to identify travel habits. This information can be used to corroborate or identify when and where the parties have traveled and provide a road map for inquiry.

#5 Pre & Post Nuptial Agreements

Pre and post nuptial agreements are contracts that formally address financial and non-financial arrangements. These agreements can also serve as a compass to help focus attention on matters not covered by a pre-ordained agreement.

Postnuptial agreements—contracts stating the division of assets after the marriage vows—have also increased in popularity. Postnups are typically created as a way to stabilize a marriage that has experienced major structural or financial changes. When a couple is considering divorce, a postnuptial agreement can help soothe rough patches by redefining the original terms of the marriage. Similarly, if the value of the spouses’ assets or income dramatically increase, a postnuptial agreement can more adeptly address fair distribution. In fact, major corporations even encourage new partners to create postnups as a way to protect the ownership of high-value equity partnerships.

#6 Previous Divorce Agreements or Court Decisions

Statistics show that the incidence of second divorces is higher than that of first divorces. The financial dilemma during a second divorce is that, in addition to fighting for marital assets pertaining to the current action, spouses also compete for resources of previous marriages. Previous divorce agreements or court decisions can provide valuable insight to a current case. Concepts such as separate property claims and existing support obligations need to be transparent. This information can be an integral part of both pendente lite and permanent awards.

Multiple divorces represent higher cost because assets and financial responsibility must be distributed between more than one former spouse and children from previous marriages. Given all potential financial complications, court decisions detailing previous agreements can delineate the current equity of a spouse, the pre-owned assets and the current assets that should or should not be affected according to previous and/or current marital settlements.

#7 Deeds of All Real Estate Owned

Real estate is often one of the most valuable marital assets. To insure it is clear who owns what and what is owed, you need to acquire a variety of documents that include, but may not be limited to:

  • Property deeds
  • Documentation regarding the purchase of the property
  • Legal description of real estate owned together or separately by the couple engaged in matrimonial action
  • Mortgage statements
  • Property refinance statements
  • Written appraisals
  • Property tax bills
  • Closing statements
  • Rental and lease documentation

A mortgage application compiles a variety of data including, but not limited to: assets owned, liabilities, income, guarantees, and even contingencies. It can also be used to support or refute information that may appear to be inflated or abridged. Parceled with other similar applications such as co-op (and condo) applications, these items can be a valuable tool to identify a variety of financial elements.

#8 Credit Reports

Most people focus on one item on a credit report – the credit score. But a credit report is actually a financial road map that identifies various financial trends. Credit reports can be compared to net worth statements that will be exchanged during the matrimonial action. Credit reports are useful in identifying assets or liabilities that may not be known.

#9 Retirement Accounts

Retirement accounts, pension plans, and social security amount to a large portion of a client’s net worth and will factor into divorce settlements. Even if the client is not close to retirement age, these accounts can have a significant influence on the outcome of a divorce. Retirement funds that are added during the extent of marriage, moreover, are considered martial property. For these reasons, they must be addressed in marital action agreements. Clients must provide a statement of individual retirement accounts and plans including: military pension, veteran’s educational benefits, ERISA funds, IRAs, Keoghs, Employee Stock Option Plans, 401(k), and 403(b), among others.

#10 Hire a Forensic Accounting Expert

The initiation of a divorce action is often a turbulent exercise. When standard auditing methods are not enough, financial forensic investigation practices become necessary. Forensic accounting specialists provide exploratory accounting and auditing services that can serve as evidence suitable for court.

As relationships become increasingly volatile during proceedings, the stakes escalate. A forensic accountant can, therefore, make a significant difference in the client’s outcomes by means of:

  • Reviewing spouse’s financial data to determine its accuracy,
  • Determining spouse’s standard of living and disposable income,
  • Uncovering hidden, transferred, deferred, and imputed income,
  • Locating hidden or transferred assets,
  • Determining what property may be considered separate from marital property (e.g. closely held businesses), and
  • Identify transmuted property (i.e. separate property that has subsequently been converted into marital property).

Hiring a forensic accountant (with vast experience in a matrimonial setting) early in the process gives clients the opportunity to profit from an expert collaboration between their legal representation and a financial analyst.

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