Take Control Blog
Financial Discovery: Finding the Assets and Liabilities
Often misunderstood at the start of divorce proceeding is how the financial terms of the divorce will be worked out. The process involves something called financial discovery. To get a better understanding of how the process works, I spoke with Monica Holden, Esq., a partner in the Miami family law firm of HoldenCapriles.
TBK: What is financial discovery and how does the process work?
HOLDEN: Financial discovery is the exchange of financial documents between the parties to a family law proceeding in an effort to promote and obtain a fair resolution of the case. Florida requires financial disclosure in almost every family law case. Financial documents are generally exchanged at the beginning of the case and include each parties’ financial affidavit, as well as other financial records dating back for a certain period of time. A family law affidavit requires that the party line item their income, expenses, assets, and liabilities. In addition, the parties are required to provide documentation regarding their income, real and personal property, bank accounts, retirement accounts, household furnishings of significant value, jewelry, business interests, and any other property and debts. The attorneys are also able to conduct depositions to ensure that all assets and liabilities have been properly disclosed, or expose any inconsistencies or omissions regarding the parties’ financial matters.
TBK: What is the purpose of financial discovery?
HODEN: The purpose of financial discovery is to investigate and confirm the other party’s claims regarding income, assets, and liabilities. The extent of financial disclosure varies depending on the type of case. For example, in a divorce case financial discovery is complicated and necessary to identify the parties’ martial assets and liabilities and their respective values, so that the Court can distribute them accordingly. In a paternity case, financial discovery is necessary to determine each parties’ respective income in order to calculate child support. In addition, complete financial disclosure is necessary to assist the parties and attorneys in reaching a settlement and bringing the case to closure. Accordingly, it is the obligation of the parties to make sure that their financial affidavit and corresponding documentation is current and accurate prior to court conferences, mediation, motions, and trial.
TBK: If discrepancies are suspected by one party, such as understated income or assets, what are the recourses to reconcile this?
HOLDEN: The attorney’s evaluation of the financial documents provide significant information to allow the development of strategies to expose discrepancies and misrepresentations. The attorney can choose to utilize the assistance of forensic accountants, private investigators, and/or asset tracing services to uncover financial discrepancies. The parties are advised to obtain forensic accountants in the event discrepancies as to income or assets are discovered. In addition, in the event the parties are unable to amicably resolve their case, these experts are available to testify before the court and present their conclusions.
TBK: If any inappropriate activities are discovered during financial discovery process, is a person liable in any manner?
HOLDEN: A party’s obligation to provide financial disclosure also includes the responsibility to provide full and frank information and documentation. Accordingly, it can establish a party’s credibility or lack thereof if any discrepancies or omissions are discovered. A party can be severely sanctioned for failing to completely and accurately participate in the court required financial disclosure. The Court may sanction the party by limiting the offending party’s ability to contest the allegations against them, limit the evidence that they can produce in their defense, order the offending party to pay for the other’s attorney’s fees and costs, and/or consider the inappropriate activities as a factor when determining its ultimate award to the parties.