If Divorce Is in The Future, What Documents Do You Need and Why?

Mott is a Certified Financial Planner® with a specialty in divorce. We have invited her to act as a contributing blogger to our post. In her first guest blog she addresses which financial documents are needed when preparing to go through a divorce, and why.

If Divorce Is in The Future, What Documents Do You Need and Why?

Child Support, Alimony, Equitable Distribution; These Are a Few of The Key Financial Issues Addressed in Many Divorce Cases. but Underlying All of These Topics Is the Need for Accurate and Comprehensive Information About the Family’s Financial Life. a Couple Is Encouraged to Create a Detailed Summary of Their Joint Lifestyle, as Well as Budgets for Each Party Post-Divorce. the Starting Points? a balance sheet listing all of their assets and liabilities and a detailed living expense summary. Determine what statements will be needed by creating an inventory list for the items on the balance sheet.

Assets include:

• Value of the home (provided there is equity)

• Bank, investment and retirement accounts

• Personal property such as automobiles

• Art or other collectibles

• Cash value of life insurance

Liabilities include outstanding balances on:

• Mortgages

• Credit cards

• All forms of loans (student, auto, personal)

The most recent statements for all of these items should be used to obtain a current value, but more updated copies may be necessary once a final valuation date is determined.

The living expense summary should be created to reflect the family’s lifestyle for one year. The Case Information Statement (CIS) located on the njcourts.gov website includes a comprehensive breakdown of costs for housing, transportation, medical and personal expenses. One year’s statements from banks, credit cards and loans are required to do an accurate and thorough computation of a family’s lifestyle. Downloading statements and aggregating them in a spreadsheet or software package like Quicken can make creating the living expense summary easier. There are also online tools such as Mint.com which categorize and summarize spending as well.

Also important to collect: Information on the family’s different sources of income. In addition to previous tax returns, pay stubs and W-2s, it may be necessary to provide documents detailing rental income, outside business interests, K-1s and unearned income from investments.

A copy of each spouse’s credit report is essential to ensure that statements for all open accounts have been provided. A credit report provides a listing of all bank, loan and credit card accounts regardless of whether they are held individually or jointly.

Setting up a simple filing system using an accordion file or colored file folders can make the process of managing all of these statements and documents much easier.

Divorce is an emotional process. By taking the time to organize your documents and create an accurate picture of your family’s financial life, it will be easier to make important financial decisions with confidence, and avoid costly mistakes.