It seems that in almost all cases of divorce, one party has been the one who handled the money and can readily provide necessary financial documents to legal counsel handling the divorce. The other party is often left in the dark and should sit down with the CPA who prepared the tax returns and go over the documents in order to discover the true financial situation. Here are some of the items that you need to gather as part of a pre-divorce financial checklist.
The Tax Return
This could be the most important financial document the parties can provide. It reveals necessary information about the general financial situation of the couple. Specific information from the tax return and attached Schedule A includes:
- The sources of all income other than gifts that were received. It will list all W2 wages.
- It will also show any interest earned, whether from a checking or savings account, or investments at any financial institution.
- Capital gains from stocks or other investments that were sold.
- Interest paid on the mortgage. It will not tell you the amount of the principal payments, but it will tell you what financial organization has the mortgage.
- Amount paid for property taxes.
- The amount given to charitable organizations.
Other Necessary Documents
Other necessary documents that need to be on the financial checklist include:
- Loan documents for the mortgage. This reveals how much is paid each month toward the principal.
- Credit card statements. These often reveal the day-to-day living expenses of the couple. They are often relied upon by the court in determining the marital standard of living.
- Trust or estate documents if there are any. The CPA may also have these documents.
- Appraisal of the family home and other real estate. In order for these to be divided during the divorce, the value of each piece of property that is part of the marital assets must be determined.
Benefits of a Collaborative Divorce to Asset Division
During a Collaborative Divorce, we sit down with the parties and put together a budget that looks at the past and helps them each get an understanding of their day-to-day expenses. This is particularly educational for the party who was not involved in handling the finances.
When they both understand what it costs to run the family home, to pay for the children’s extracurricular activities, and pay for other expenses, it gives them a baseline at what to look at going forward. They begin to understand the difference in discretionary and necessary expenses.
A Collaborative Divorce gives them the opportunity of making their own suggestions of how to manage the finances and to work within a reasonable budget going forward. Something that is not true in a fully litigated divorce case.
From the Blog
Benefits of A Financial Specialist in Your Divorce
Going through a divorce is generally a stressful period. While emotions are running high, daily financial obligations must be met. At least one spouse is often concerned about their financial future. Some stress can be alleviated with the help of an accounting specialist who can help the couple achieve a more amicable divorce with both parties feeling the asset division was fair and … [Read More...]
Get in Touch
