The divorce process, even in the most amicable situations, requires both parties to gain a complete understanding of the marital finances. If you do not know everything about your financial situation, you must take the time and put in the effort to understand your situation before you begin discussing settlement. To begin your investigation and learning experience, be sure to take time looking into the following issues:
- Tax Returns: Reviewing your tax returns for the past 3-5 years is always a good place to start. Look for any inconsistencies in business income, investments, real estate deals, deductions, or anything else that you do not understand. If you find something unusual, ask about it or get the back up documentation that supports the issue. If you cannot find your returns, you can contact the IRS and download form 4506. This form will allow the IRS to send you signed copies of past tax returns.
- Business Tax Returns: If your spouse owns a business, they may have filed a separate tax return for it. You are entitled to a copy of it and should look over income and expenses. Look for large savings accounts held by the business, personal expenses charged to the business, and expensive assets (vehicles, real estate, and expensive equipment). If they were acquired during the marriage, the ARE marital assets regardless of what name they are held in.
- Marital Checking and Savings Accounts: If you were not in charge of the accounts, take time to look over the last year or two of transactions. You may find money going to a different account you were not aware of, items purchases you have never seen, or expenses for things like credit cards you did not know existed. It is important to understand the complete financial picture.
- Children’s bank and college savings accounts. You should be aware of these transactions as well as they are often raided by a spouse who is in need of funds. Additionally, people have been know to use an account under a child’s name to hide money using a custodial account for a child, and then withdraw it after the divorce is finalized.