The Importance of Record Keeping Throughout the Marriage
The maintenance of complete financial records throughout marriage can prove invaluable to the divorcing couple. While such records can be the undoing of a spouse or couple engaged in illicit activities, for most, the maintenance and retention of bank statements, cancelled checks, credit card statements, property purchase and sale records and Federal, State and local tax returns (at a minimum) become an indispensable resource for the divorcing couple.
In the contexts of mediation and collaborative divorce, the retention and production of financial records provide the professionals assisting the couple with the information needed to advise them individually, or collectively, as the case may be. Exchanging such records in those contexts is commonplace and typically leads to equitable and fair outcomes.
In the context of a contested divorce, where the couple is at odds over money, property, support, or other financial issues, the Court will direct and enforce the mandatory exchange of financial records between the parties. This is referred to as “discovery”. There are few limits on discovery of spousal financial records in divorce cases. Courts insist that the process be completed at which time the Court will certify the case as ready for trial.
Where one party has assumed the role of the bill payer for the household, that party may also assume the role of the holder of financial records for the family. This may lead to an inequitable situation where one party has a far greater knowledge of the financial dealings of the family than the other. The trusting relationship regarding financial activities which is established during marriage typically deteriorates in divorce settings. Often times, divorce attorneys will authorize an overt or clandestine raid of the records maintained by the record keeping spouse to gather information about diverse assets, accounts and property ownership. When there are gaps or inconsistencies in the records, what is commonly referred to as a “fishing expedition”ensues, which is unavoidable and necessary in many circumstances and a profound waste of time, energy and legal and accounting fees in others. An incidental concern is that the attorney has a duty to be thorough in discovery (or run the risk of a legal malpractice claim being asserted against the attorney). These considerations often times must be balanced against the high cost of obtaining information and documents. [A simple example is where funds are maintained in overseas foreign bank accounts which cannot be obtained through a subpoena.] The divorcing party (without the records) is then provided with options by the attorney and then must decide on the appropriate path to take to obtain an equitable and fair outcome.
Thus, it is critical in any divorce context that record availability and transparency is an important issue to be addressed immediately with the divorcing party’s attorney or the divorce mediator.
If you would like to discuss your divorce issues with me, or wish to schedule a mediation consultation with a Long Island divorce attorney, please call my office at 516-747-2290.
Author: H. Michael Stern, Attorney at Law