The Paper Chase: Why Keeping Financial Documents is a Huge Benefit in Contemplation of Divorce

A couple’s financial choices during a marriage are documented in what may at first blush appear to be a never-ending slew of paper.  At divorce, those documents become crucial to equitably distributing a couple’s assets and debts.  Before assets and debts can be divided, they first must be identified, classified and valued.  Classification involves determining what property is separate property and what property is marital.  In order to assist your lawyer in this process, there are a few key documents that you will want to obtain, organize and present for review.  Below is a list of some, but not all, of the important documents that may be requested:

  1. Income tax returns.  Obtain as many personal, corporate, partnership, joint venture, or other income tax returns, both state and federal, including all W-2s, 1099s, K-1 forms and other supporting documents for as many years of the marriage as possible.
  2. Pay statements.  Pay stubs often show bonuses, commissions, overtime, retirement benefits and contributions to 401K plans.  A prior year’s pay stub can be a great source of income detail and can be used to predict the receiving spouse’s income for the upcoming year.
  3. Bank account information.  Retain or copy all monthly bank statements, check stubs or registers, deposit slips and canceled checks for all personal and business accounts from banks, savings and loan and credit unions.
  4. Loan applications.  For all mortgages, second mortgages, home equity lines of credit (“HELOCs”), credit cards, lines of credit, car loans and promissory notes, loan applications may include important information regarding assets, debts and income declarations.
  5. Business ownership records.  For corporations, find all records indicating ownership interest, such as stock certificates, charters, and corporate minutes.  For partnerships and limited partnerships, look for any documents titled or captioned as an “agreement.”  For limited liability companies (“LLC”), search for operating agreements.  For any type of business, the documents may be titled or headed using many different combinations of words.  If you think you or your spouse owns part of a business, even a small part, be sure to include that in your financial disclosure.
  6. Résumés.  Résumés for either spouse can become important if one or both spouses are not earning as much money as in the past or are voluntarily underemployed or unemployed.
  7. Internet history, emails, instant messaging records, text messages and cell phone records.  To the extent that you already have them, retain any electronically stored documents or files, emails or internet history printouts.  For text messages and cell phone call logs, take screen shots and print them out if possible as most cell phone carriers destroy records of texts frequently.  However, never hack into your spouse’s computer or add spyware to any computer.  Doing either may be considered a crime in your jurisdiction.
  8. Stock options.  Important documentation related to stock options can include detailed plan descriptions or plan summaries; benefit statements; employment contracts; and schedules of vested and unvested granted stock options, exercise dates, exercise prices, expiration dates, and vesting dates.
  9. Pension plans, profit-sharing plans, deferred compensation agreements and retirement plans.  To the extent possible, try to obtain all benefit statements, including the most recent benefit statement, a summary of the plan, the plan’s qualified domestic relations order (“QDRO”) procedures and any supplemental information describing the plan and its benefits.
  10. Credit card statements.  Copies of all recent credit card statements and receipts may become necessary in order to value and assign marital debt to each party.
  11. Student Loans.  Student loan statements of one or both spouses are important to keep, particularly if the student loans were accrued during the marriage and some funds used for joint household and living expenses.
  12. Insurance.  Obtain copies of all insurance policies including, but not limited to, life, annuity, health, accident, homeowner’s, casualty, renter’s, motor vehicle, property or premises liability.
  13. Real estate. Deeds, closing statements, tax bills, appraisals, mortgages, security agreements, leases and other evidence of any type of interest or ownership in real estate.
  14. Personal property.   Retain all invoices, receipts, contracts and appraisals on all personal property with any great value including furniture, artwork, antiques, jewelry, cars, boats, and other motorized vehicles.
  15. Employment records, contracts, and explanation of benefits.   This includes any formal employment contracts, offer letters, documentation of compensation, and other benefits or deductions of any kind.
  16. Wills, living wills, powers of attorney and trust agreements.  Whether they were executed by you or your spouse, pull all records of wills, living wills, powers of attorney, and trust agreements.
  17. Membership agreements or contracts.  This includes evidence of membership for all country clubs, private clubs, associations or fraternal organizations that you and/or your spouse belonged to during the marriage.
  18. Medical records.  If you or your spouse has a serious medical condition that limits or prevents employment, records documenting the diagnosis, names of treating physicians, evaluations, prescriptions and prognosis can be important evidence to demonstrate need for spousal support.  The mental and physical health of the parties, as well as any minor children, is also relevant to the Court’s custody determination.
  19. Inventory safe deposit boxes or in-home safes.  If you haven’t already done so, making a list of what you and your spouse have secured in any safe deposit box or in-home safe is easy and will be helpful in identifying assets and their current location later.
  20. Calendars.  Calendars can become important documents, particularly in cases involving children.  A family calendar can document important activities such as parent-teacher conferences, extracurricular activities and sporting events, and out-of-town travel for one parent.

Bottom Line: Compiling an accurate financial picture of your family’s resources takes time and is crucial, particularly for families with complex financial situations (i.e., multiple business interests, stock options, self-employment income, multiple retirement plans or real property interests).  It is generally a good idea to provide your counsel with as many documents as possible early in the process to expedite settlement negotiations and prepare for any pendente lite support hearing.  Being open and forthcoming with your attorney about your family’s financial picture will allow your lawyer to effectively advocate your position without being thrown off-guard by a smoking gun document or a hidden asset or liability.