Should You Finalize a Divorce Before Full Financial Disclosure?
If you’re navigating divorce with assets you don’t want to part with, you’re probably wondering, “Should I divorce before giving disclosure?” As experienced divorce lawyers in Phoenix, AZ, Lincoln & Wenk can advise you on how to finalize your divorce while advocating for a settlement that benefits you. Keep reading to discover the relationship between divorce proceedings and financial disclosure and how we can help.
What Is Full Financial Disclosure and Its Role in Divorce?
In general, you should practice full transparency and reveal all your assets before you finalize your divorce. Why should you divulge your complete finances during the process? It protects you from the legal consequences of hiding assets.
Some states, like Arizona, require you to divide your property in a roughly equal way. In other words, while you won’t split everything 50/50, it must come relatively close to equal. This differs from the majority of states that mandate the division remain equitable (proportional to the person’s income, lifestyle, and needs).
The court or divorce mediator cannot split your assets equally if they don’t know what each person owns. If your ex or their lawyer discovers you hid property that you should have divided equally, you may face a lawsuit. A full financial disclosure includes the following.
Disclose Your Real Estate and Property
Whether you own multiple properties or a single home, you must include them among your assets during divorce. Divorced couples rarely continue living together, so how do you equally divide home ownership?
- One spouse can keep the house and give the other a payment worth half its value.
- You can sell the house and split the proceeds.
- One party can continue living there (especially with kids involved) and find another way to compensate the co-owner.
Include Your Cars, Boats, and Other Vehicles
Cars and trucks aren’t the only vehicles you must disclose during your divorce. For example, if you own a boat, you’ll have to determine how to equally divide it, similar to what
Don’t Forget Investments and Finances
If you’re wondering, “Should I divorce before giving disclosure,” don’t forget to reveal all your investments and finances. This can include joint ownership of a business, stocks you carry, and your checking and savings account. If it adds to your net worth, don’t conceal it.
Reveal the State of Your Retirement Accounts
Retirement accounts provide long-term security. Therefore, the courts want to divide their worth equally so each party can have a comfortable life once they’re done working. Dividing your retirement accounts may come with some tax burdens, but don’t use that as a reason to avoid revealing them.
You Must Divide Valuable Items
Jewelry, precious metals, electronics, and other valuable items all count as part of your assets. For example, if you have a priceless work of art or a huge plasma TV, the judge will consider those assets when dividing things equally. A lawyer can help advocate on your behalf if you have items that have both high monetary and sentimental value.
Division Includes Your Shared Debts
Many people don’t realize that dividing assets also includes your debt. The State of Arizona considers any debt communal, regardless of whether you incurred it before or during the marriage. This is one aspect of division that can benefit you if you have more debt than your spouse.
What Happens If You Provide Full Disclosure Only After Divorce?
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The Court Can Hold You in Contempt
Even if you don’t intend to hide assets, you should still fully reveal them to avoid any appearance of wrongdoing. Hiding assets is illegal in Arizona, so even if you accidentally fail to report some of your finances, the court can find you in contempt. What are the penalties for this crime in the state?
- An official misdemeanor charge on your criminal record
- A minimum penalty of $500 (and up to $15,000 if you committed perjury)
- A felony charge if you fail to appear in court during proceedings
You’ll Pay Expensive Sanctions T
To help address the unequal distribution you caused by hiding assets, the judge may force you to pay additional money to your ex. These sanctions may feel harsh, but they’re intended to discourage people from incomplete disclosure. Potential consequences include:
- Reimbursing your ex for the value of the assets you hid
- Paying their attorney fees and court costs
- Increased alimony or child support payments
Your Ex Can File a Civil Lawsuit
If you’re searching, “Should I divorce before giving disclosure,” consider whether you can handle an additional court case. A marriage tort is a civil (rather than criminal) legal proceeding that seeks to determine whether you caused harm to your spouse and establish the penalties for doing so.
In a dissipation of marital assets tort, your ex can seek damages above and beyond the criminal penalties imposed by the judge. For example, they could pursue damages for emotional suffering, loss of income, or other harms depending on the type of asset you hid.
You Could Serve Jail Time
If you had hidden assets during the divorce and didn’t attend all the subsequent court cases, the judge could charge you with a more severe contempt of court. They can also increase the charge if they impose fines and payments on you that you didn’t pay.
In this circumstance, the charge increases to a felony. You could serve up to five years in jail.
How To Prepare Disclosure for Your Finances
How can you prepare your finances for disclosure so you don’t accidentally hide anything?
Organize Your Financial Documents
To ensure you don’t overlook anything, prepare all your financial documents well in advance of disclosure. You’ll need the following:
- At least one year’s worth of tax returns (three is better)
- A year of pay stubs
- Bank statements
- Mortgage documents
- Retire account statements
- Consumer debt documents
- Broker records
- A list of valuable personal belongings
Your lawyer can give you a more comprehensive list and confirm you don’t miss anything.
Prioritize Honesty and Accuracy
During the process, you should remain 100% transparent, even if it means you lose some assets. The consequences of hiding anything always cost you more than complete honesty. If you’re worried about accuracy, have a professional look over everything.
Enlist Help From Qualified Professionals
Not everyone has an eye for detail, and when you’re dealing with the emotional burden and stress of a divorce, you may not think as clearly as usual. Don’t risk navigating divorce without professional help. Lawyers, accountants, and therapists can help you operate more clearly and prevent you from making costly mistakes.
Don’t Overlook the Importance of Updating
If you can make it through your entire divorce process without gaining new assets, you keep the process simple. However, divorce can take several months, and not everyone can go that long without changes to their financial state. Whether you pay off debt, buy a new vehicle, or receive an inheritance, update your documents immediately.
Work With Your Spouse When Possible
If you’re Googling, “Should I divorce before giving disclosure,” you may not have a good relationship with your spouse. Still, you should work with them as much as possible to ensure you both disclose all your assets. However, if doing so puts you at risk (for example, in the event of marital abuse), your well-being comes first.
How Experienced Lawyers Can Help With the Disclosure Process
Why should you enlist the help of an experienced family law attorney?
They Help You Avoid Costly Mistakes
An attorney with experience in divorce proceedings can take a systematic approach to disclosing your finances. They know everything you need and operate with a high degree of detail. You’ll never worry about making a mistake that could incur the serious penalties associated with contempt of court.
They Can Argue the Definition of Equal Distribution
Dividing your assets equally rarely involves a straightforward process. In many cases, you have room to advocate why you should retain certain items instead of others. If you own things you can’t bear to part with, a lawyer gives you a better chance of keeping them post-divorce.
They Investigate Your Spouse’s Hidden Assets
Are you researching asset division because you think your ex is hiding something? Hiring an experienced lawyer can improve your chances of uncovering the truth. A team of attorneys can do a deep dive into your spouse’s financial history and transactions to find the evidence you need.
Schedule a Consultation With Our Lawyers Today
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