When facing a divorce it can be easy to become overwhelmed by emotions. There can be tremendous sense of uncertainty about the future. This uncertainty relates both to how the family dynamic will play out as well as the area of finances. Regardless of the situation, the couple must be able to think clearly and get their financial house in order as they prepare for the divorce process.
An article published by US News and World Report contains some useful information about how to get your finances in order before divorce as well as a basic checklist of the information you should bring with you when you meet with a divorce attorney.
The checklist includes:
• Federal/state/gift/intangible personal property tax returns from the last three years
• Forms W-2, 1099 and K-1 from the past year
• Three months of recent pay stubs
• Specified loan applications, deeds and lease agreements
• Bank account statements, including checking, savings and credit cards
• Retirement plans
• Life insurance
Full disclosure of all financial information is critical for coming to the fair and equitable resolution of the issues and dividing the marital estate. In a traditional litigated divorce case, if one of the parties does not cooperate with providing the necessary documentation it can significantly increase the costs of the divorce and the time it takes to reach an agreement.
On the other hand, in the collaborative law all parties agree at the onset to honest and open disclosure of all financial information. This saves time and money by limiting the need for discovery and allows the parties to focus their energy and resources on the future instead of the present divorce process.
In addition, the parties have the help of a financial neutral who will assist them with determining a fair way to distribute assets and liabilities. The financial neutral may be able to provide a number of different options. Because the financial neutral is not advocating for any particular side he or she is often able to find creative solutions that allow the spouses to move forward in everyone's best interest.