Posted on November 1, 2023 by Mina Saudagaran
Managing personal finances is stressful, and many people are glad to let their spouse take the lead on paying bills, filing taxes, managing investments and the like. However, when preparing for divorce, you should have a good understanding of your finances, including your and your spouse’s income, as well as your assets and liabilities. One way to gain this understanding is by gathering important financial documents that you will need to share with your attorney, and which may be required by the Court. Though many attorneys will provide you with a list of requested financial documents, there is no reason for you to wait for your attorney’s prompting to get your documents in order. Save yourself time later on by locating the following:
- Tax returns and related forms (W-2, 1099, K-1). Start by locating your tax returns, W-2s, and other any other tax documents from the last 2-3 years. Even if your earnings have changed since your last W-2 or you have changed jobs or retired, your attorney will still want to see your recent tax documents. Now is also a good time to locate your and your spouse’s recent paystubs, so you can provide those to your attorney upon request. Copies of any employment agreements outlining the terms of your and/or your spouse’s compensation and employment benefits can also be helpful.
- Recent account statements for all financial accounts. This includes checking and savings accounts, brokerage accounts, retirement accounts, 529 plans, mortgages, credit cards, student loans, etc. Statements for these accounts can generally be accessed online. Make sure you know the passwords to your online accounts or have access to hard copies. Your attorney will want to know the current balances of these accounts and will provide guidance on how far back you should go in pulling older statements.
In addition to locating the above documents, you should also be prepared to discuss the following to help your attorney get a better understanding of your financial situation:
- Current value of real estate. This includes the value of any investment properties that you or your spouse own. The good news is that Zillow, Redfin, etc. make it easy to look up an estimate. (However, be mindful that these values are not indicative of market value and may not be acceptable as evidence in Court.) If you already owned a home by yourself when you got married, make sure to tell your attorney this as well and gather documentation associated with the purchase/sale.
- Business interests. If you or your spouse are owners or investors in a business of any size, be sure inform your attorney and gather any applicable business formation documents, including operating agreements, as well business tax returns, and any other financial statements pertaining to the business. Unlike real property, private businesses cannot usually be valued through an Internet search. Your attorney will advise whether he or she recommends a business valuation by a financial expert and what that entails.
- Trusts, inheritance, gifts. Tell your attorney if you or your spouse is a beneficiary of a trust. He or she will not expect you to know all of the terms of the trust, particularly if your spouse is the beneficiary. Just share whatever information you have. Likewise, tell your attorney if either you or your spouse received any inheritance or major gifts during your marriage.
- Major current or anticipated future expenses. Do you have children who you plan to support through college? Are you in the middle of renovating your home? Did you recently sell an asset for which you expect to pay capital gains tax this year? All of these expenses can factor into your final divorce settlement, especially if spousal support and/or child support is at issue.
Finally, a financial statement outlining your assets and debts with estimated values can be a good starting point for discussion with your attorney.
Knowledge is power, and gathering information about your finances can help you feel more prepared as you take the first steps toward divorce. If you have any questions about how your divorce may unfold or would like support, contact one of the family law attorneys at Lasher Holzapfel Sperry & Ebberson PLLC for assistance.