The equitable distribution of property involves the complicated process of identifying all assets, income sources and liabilities; characterizing each as marital or separate; and reaching an equitable division of the marital estate. Because New Jersey is an equitable distribution state, the division of assets and debts will be fair based on a number of factors but this does not mean that it will be a 50-50 division. This process can be complicated even in an amicable divorce, but when one of the parties attempts to hide and divert marital assets or run up inappropriate debts, the process becomes far more difficult.
Many times, the “out spouse” is the party who faces the challenge of exposing the other spouse’s waste of marital assets or hidden marital assets. The term “out spouse” refers to a party that may have had only nominal or no involvement in household financial matters or the running of a business entity. Because the out spouse was detached from household and/or business financial affairs during the marriage, this spouse may not have a solid understanding of the extent of the marital estate in terms of the specific assets and debts nor recognize their value. This means that the spouse who was detached also may not know how to acquire documents and financial records that are essential to evaluating an equitable distribution of the marital estate.
Both parties to a divorce have a duty of financial disclosure toward the other spouse regarding financial matters, such as real property, personal property, retirement accounts, household furnishings, bank accounts, antiques, collectables, business assets and income, as well as other forms of property and income. When the parties have a high net worth, the estate may include assets that are more difficult to value like stock options. One or both parties also may have a fairly high level of sophistication regarding financial matters so that they are more able to hide assets or cash in a business entity, antiques and collectable or sham financial transactions.
When spouses disregard their obligation of financial disclosure toward the out spouse during a divorce, they are not proceeding ethically or legally. Our experienced New Jersey divorce attorneys use the full range of discovery tools which may include:
- Demands for production of financial documents
- Deposition of a spouse
- Requests for admission or denial of key financial facts
- Interrogatories (written questions) directed toward a spouse probing financial information
- Subpoenas requesting other financial information
While aggressive use of the discovery process can provide critical information necessary to uncovering hidden assets and the inappropriate waste of marital assets or income, we carefully analyze tax returns, profit and loss statements, bank records and 1099 documents for discrepancies, improper transactions, undisclosed income streams and improper liquidation of marital assets. Our New Jersey divorce lawyers’ evaluation of financial records may derive as much information from what the documents do not say as what they do. While we develop strategies to expose hidden assets based on a joint evaluation with our client weighing cost vs. return, we may also employ financial experts, including forensic accountants, asset tracing services and private investigators under the appropriate circumstances.