In any divorce, the division of assets and support calculation (if any) will be one of the main, if not the main, focal points of the divorce process. In order to accomplish this task, both parties and their counsel should have a thorough understanding of the parties’ financial circumstances – income, expenses, assets, and liabilities, among other things. Such concerns are often the target of discovery – parties are entitled to receive relevant information from the other side in order to make an informed decision. Such processes can sometimes be time-consuming and expensive, particularly in cases involving more complex financial arrangements.
However, at the outset of the case, it is helpful for both parties and their counsel to receive very basic financial information in short order. This allows parties and their counsel to at least have a sketch of the parties’ financial circumstances, even if the full picture will not be complete until later in the process. With this information, the parties can start to formulate scenarios of how the parties will look financially after (and even during) the divorce.
To facilitate this initial exchange of information, self-disclosure is mandated by court rules. Supplemental Probate and Family Court Rule 410 requires (unless the parties otherwise agree), that within 45 days of service of the summons, both parties exchange basic financial information. This includes the parties’ tax documents (federal state and income tax returns, partnership or closely-held corporate returns, W2s, 1099s, K-1s, etc.) for the last three years; the four most recent pay stubs each party has received; documents reflecting health insurance coverage; the last three years’ worth of bank, investment, and retirement account statements; any copies of mortgage or loan applications made in the last three years; and any financial statements or assets and liabilities statements prepared by either party in the last three years.
The task of assembling this information can be onerous – for example, collecting three years’ worth of every account statement can create an enormous amount of paperwork. Parties can agree to deviate from this rule by agreement in order to narrow the scope of disclosure; there are many occasions where this level of disclosure is not essential to the resolution of a case. However, these disclosures are very important and can furnish a large amount of information about the parties’ financial circumstances, particularly in the early stages of a case. Prompt compliance with this rule can move a case forward substantially, and will start to move the parties towards the resolution of this difficult process.