According to statistics published by the American Psychological Association, between 40 and 50 percent of marriages end in divorce. For California couples, one major hurdle to clear before divorce is to know the financial situation. As soon as divorce becomes a real possibility, it is important for the parties to gather certain documents and information. Among the most important documents to have are tax returns, a lifestyle analysis and a net worth statement.
Tax returns contain a lot of information that is important for divorcing couples. Ideally, each spouse should have the couple’s three most recent returns, along with supporting documents. Common supporting documents include 1099s, K-1s and W-2s. People who do not have these documents can request them from the IRS with Form 4506.
A lifestyle analysis provides information about the parties’ expenses and income. It can take time to go through expenses, but it is often worth it. There are expense tracking tools online to help people put together lifestyle analyses. Bank and credit card statements can be useful to verify spending patterns and habits.
When people divorce, the court will want an affidavit assessing the parties’ financial situations. This document should include assets, liabilities, income and expenses. The net worth statement is a tally of assets and liabilities. Investments, bank accounts and retirement accounts should be listed, along with supporting documentation. Both parties should also run credit checks to find liabilities that are not listed elsewhere.
People who are approaching or going through divorce in California might want to schedule a consultation with a lawyer. A lawyer with experience practicing family law might be able to help by identifying and classifying the assets and liabilities of the parties. A lawyer might negotiate with the other spouse on the terms of property division or argue for the client during discussions of alimony or child support.