Most of my divorce practice is uncontested and amicable. I help two consenting adults conduct the equivalent of a business transaction, so that both can move on with their lives and keep as much of their assets and dignity intact as possible. In many of these cases the couple knows their own and each other’s financial situation. They have a comfortable familiarity with who earns how much and where the money goes after it is earned. They can both recite with confidence and accuracy the couple’s earning ability and expenses. Sometimes these are people with two jobs (or more); they might have debts or no debts; they might have one job, one mortgage; or several mortgages and a looming foreclosure. The financial situation is not what dictates who knows what about their finances. The people themselves are what determine their level of knowledge.
Spouses who go into a divorce with eyes wide open and all financial information already on the table are more comfortable negotiating with each other and mapping their individual futures.
But let’s face it between day-jobs, taking care of kids, and getting to and from work/school/chores/errands, there isn’t always time to stop and analyze your financial situation. And, when times are tough and you’re trying to save your marriage, it might feel like it makes more sense to “forget it all,” and have a nice dinner date in a restaurant than to stay home and see if you can balance the checkbook.
It is perfectly human and understandable to get to the moment of meeting your divorce attorney and realizing that you cannot answer simple questions like, “How much debt do the two of you have?” “How much equity is in your house?” “If you were to move out, how much rent could you afford to pay?”
Luckily, there is a legal process available for those people who want to reach a fair agreement, but don’t feel well informed about the family money. This process is called “Discovery.”
Discovery can be the undoing of an amicable divorce, or a useful tool in getting to the bottom line. If both parties cooperate fully, they just bring all of their bank statements, credit and debit cards, retirement accounts, pay stubs, tax returns and mortgages to the table, giving each other, the mediator, the lawyers, or any financial advisors free reign. It is then a somewhat black and white picture of who can afford how much and when.
Reluctant parties however, may find themselves faced with having to answer questions, called “Interrogatories” about their spending habits, such as when and where they shop, when and where they eat, when and where they vacation, and with whom, names and addresses of employers, bosses, business associates, and friends. They may also be ordered to hand over every pertinent document (“Requests for Production”) including credit card records, phone records, medical records, bank statements, contracts, stock options, golf club by-laws, family Wills and Trust documents and more.
Finally, and maybe the most invasive form of Discovery is the “Deposition,” in which a lawyer interrogates a witness (who might be one of the divorcing parties, or any of their friends, family, employers, work associates, or anyone else reasonably likely to know about the couple’s situation) in front of a court stenographer who captures every word the witness says and creates a written manuscript of the entire proceeding.
The more time lawyers spend seeking Discovery, the more money it costs the parties. This might cause people to want to skip Discovery and get right to the negotiations. But a divorce agreement written without a full and truthful accounting of all finances can end up costing everyone much more in the end.
What We Love: Divorce is one of the few types of law in which the parties themselves can help control their legal bills just by being forthcoming with their own information.
– Sharon Oberst DeFala