Financial records can be very personal in nature. Often, these records contain confidential information and are not open to inspection from others. However, in a divorce proceeding, both parties are generally required to make a full financial disclosure to each other and the court. This level of scrutiny sets the parameters for what both parties may request in the divorce, as well as ensures that decisions regarding property and support matters are not based on missing or inaccurate information.
In contested divorces, neither spouse may want to be forthcoming with financial information. To address this issue, some states have enacted mandatory disclosure laws that come into effect after a divorce is filed, requiring both spouses to furnish each other with specific documents upon request. This process is referred to as statutory discovery. It generally permits access to statements concerning all sources of income, titles and appraisals of real and personal property, as well as retirement or investment account information. These laws also typically require spouses to provide documentation concerning all debts including credit cards, loans and mortgages.
Additional financial information not covered under the mandatory disclosure laws may be allowed through more formal discovery techniques. In most states, the scope of discovery is broad, providing spouses with the right to see any non-privileged evidence relevant to their case, as well as information that could lead to the uncovering of other relevant evidence. However, discovery has its limits and as such, the court may deny any request that is too vague or is meant to harass a spouse or delay the proceedings. For example, a request to see a statement containing the cash value of a life insurance policy purchased during the marriage may be permissible, but asking for a spouse's savings account records since birth likely would not be acceptable, absent unique circumstances.
Once the financial records of both spouses are on the table, each party can work towards a fair settlement of the property and debts. If the couple cannot reach agreement, the court uses the financial records to place a total value on the property and debts subject to division -- which includes most property and liabilities acquired during the marriage. With this value in mind, the court divides marital property in a way that is either equal or based on the principles of fairness, depending on the state.
Either spouse may request an alimony award -- also referred to as spousal support -- during divorce. The purpose of the award is to further the same standard of living enjoyed during the marriage. Financial records are crucial to seeing whether either spouse can be self-supporting at the same level after divorce, as well as to what extent either spouse has an ability to pay support.
If you and your spouse have minor children, financial records will come into play in determining a child support obligation. While the person ordered to pay support -- typically the parent that is not awarded primary custody -- is required to fully disclose his income, some states also look at the income of the spouse who will be receiving the support. For that reason, complete financial records from both parties is a vital part of making a correct child support computation.