Discovery for the financial portion of the family law case can be time-consuming, particularly for cases involving high-net-worth or high-income spouses. There may be many accounts with a high volume of transactions, creating thousands of pages of paper or digital financial documents. Unfortunately, this process is a necessary part of family law cases, particularly if there are multiple sources of income, if the totality of the family’s assets is unknown, or if a number of the red flags discussed in Chapter 4 are present.
Even though documents can be obtained during discovery through informal requests for them, it is not advisable to rely on an informal process for gathering data. What happens if a key account is “forgotten” in the process? By making the demand for documents formal, a paper trail has been established, and the party can be held accountable for failing to disclose that account and the relevant documents.
Reliability of Records
Which financial records produced in the family law case should be considered reliable? One of the most important factors to consider is the source of the documents. The most reliable documents come from disinterested third parties. For example, parties such as banks, insurance companies, and title companies, which have no apparent interest in the family law case and no apparent personal relationship with either of the spouses, tend to keep very reliable records. Since they have no personal interest in the divorce (and likely no knowledge of it), they have no motive for manipulating records or documents prior to producing them.
On the other hand, documents and records created and maintained by the spouses or people close to them are more likely to be manipulated. Check registers, asset listings, and other documents prepared by the parties to the family law case are subject to manipulation, and, therefore, the financial expert should think carefully before relying on such documents as a primary source of information for the lifestyle analysis.
Documents Needed for the Lifestyle Analysis
Appendix B has a comprehensive list of financial documents that may be requested and subpoenaed in family law cases. While no such list can cover every possible scenario, this list is likely comprehensive for the vast majority of cases. However, some of the items will apply to only the occasional divorce and child support case. Briefly, the most common documents that should be requested in ordinary family law cases include:
- Personal income tax returns (including copies of W-2s, 1099s, K-1s, and other supporting documents and schedules)
- Pay statements or stubs (showing current and year-to-date wages, bonuses, commissions, overtime, retirement contributions, and other pay or benefits)
- Personal financial statements
- Loan applications (for mortgages, home equity lines of credit, credit cards, auto loans, or other personal or business loans)
- Documentation of debts (loan agreements and receipts related to any personal loans from financial institutions, individuals, or any company)
- Insurance documents (proof of coverage, declaration pages, policy documents, asset listings, appraisals, invoices, or billing statements)
- Real estate documents (tax bills, closing statements, deeds, appraisals, mortgages, or leases)
- Personal property documents (documentation for significant assets, including invoices, receipts, appraisals, titles, loan applications, registrations, and photographs)
- Wills, living wills, powers of attorney, and trust documents
- Inventory of safes and safe deposit boxes
- Bank statements, deposit tickets, canceled checks, and check registers (including checking accounts, money markets, and savings accounts)
- Brokerage account statements (all accounts including those owned individually, jointly, as trustee, or as guardian)
- Retirement account statements (IRA, 401(k), 403(b), pension)
- Credit card statements
- Copies of personal finance software data (Quicken, QuickBooks, or something similar)
Also included in this chapter:
Documents Needed for the Lifestyle Analysis (Personal and Business)
Time Period Analyzed
Failure to Produce Documents