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Financial Disclosure in High Net Worth Divorce

Financial and Asset Disclosure in a Florida Divorce

A party to a divorce must disclose their financial condition, including all real property, personal property, retirement accounts, household furnishings, bank accounts, antiques, collectables, business interests and other forms of property and income.  In a high net worth divorce, assets may be more difficult to value.  Therefore, it is often necessary to employ accountants, appraisers and other professionals to value stock options, artwork, antiques or collectibles.

One spouse in a divorce may have a high level of sophistication concerning financial matters.  Also, that spouse may attempt to hide assets or cash in a business entity or through sham financial transactions.  On the other hand, some spouses are simply malicious.  Regardless of their understanding of the financial disclosure requirements, they may refuse to disclose all of their financial holdings or property interests despite the requirements imposed by Florida law.

When a divorce is filed, as a matter of standard procedure, the court will issue an order prohibiting the parties from transferring or alienating marital property without the consent of both parties, until further order of the court.  Marital property, as a general rule, is any property obtained during the marriage.  Exceptions apply for various circumstances, such as property obtained through a bequest or devise from the spouse’s family.  Regardless, the parties must comply with mandatory financial disclosures under Florida law.

When a spouse fails to comply with the legal obligation to disclose all financial holdings and dealings under Florida Family Law Rule 12.285, we use the full range of discovery tools to expose unreported, hidden or diverted assets and income.  Techniques include:

  • Demands for Production – Florida rules allow a party to file Requests to Produce. A production request is a document filed with the court and served on the other spouse that includes a list of requested documents. The spouse that receives the production request must comply with the request within a relatively short time.  It is important to submit requests to produce early in the case in order to ensure assets and funds are identified and protected.  When the spouse fails or refuses to comply with the production request, a Motion to Compel can be filed and the spouse will be forced to disclose the requested information. If the spouse continues to fail to comply, sanctions can be imposed for noncompliance.
  • Deposition of a Spouse – A deposition is a testimonial proceeding conducted outside the courtroom. Everyone shows up at an attorney’s office, the office of a court reporter or other appropriate location. There is no judge present but the deposition is an official proceeding. A deposition is an opportunity for the spouse that is trying to find hidden assets to conduct a detailed examination of the other spouse. Depositions can expose lies or inconsistencies. Depositions can also provide sufficient information to conduct a more detailed search for assets through other means.
  • Requests for Admission – A Request for Admission puts someone under a legal obligation to either admit or deny an important financial detail. If someone denies a fact and it is later proven to be true– they can be responsible for attorney fees. Failure to respond to requests to admit can cause the facts to be deemed admitted.
  • Interrogatories – Interrogatories are formal written questions directed to a spouse to discern financial information. The respondent typically has 30 days to provide the answers. Interrogatory answers tend to be well planned out and end up being almost useless to the case.
  • Subpoenas – Record Subpoenas are documents sent to employer’s, financial institutions, medical providers, and businesses. Whoever receives a subpoena is under a court order to provide the requested records.
  • Forensic Accounting – Accountants can provide an expert analysis of a spouse’s income and financial resources. Attorneys and judges are often ill-equipped to process complicated financial transactions or holdings, but an accountant can streamline and simplify information for use at court.  Expenses for a forensic accounting commonly range between $5,000 and $15,000, but for those involved in a high net worth divorce, the loss that could be incurred by not employing an accountant can be much higher.

After gaining the necessary records, a careful analysis is required.  Tax returns, profit and loss statements, bank records and 1099 documents are checked for discrepancies, improper transfers, undisclosed income and improper liquidation of marital assets.  Once this analysis is complete, a comprehensive and accurate picture of the parties’ financial circumstances can be determined.  Accordingly, financial relief can be sought.

The Most Common Form of Financial Disclosure

Every Florida divorce case requires each spouse to file a financial affidavit. The affidavit is an overview of relevant financial information. The financial affidavit is a detailed listing of each spouse’s income, expenses, assets, and liabilities. No filing should be necessary to compel the filing of the financial affidavit; it is required by Florida Rule of Family Law 12.285 and it cannot be waived by the parties.

For a spouse that is hiding money or assets, the following issues tend to come up in their financial affidavits:

  • Reported gross income that does not match their payroll
  • Reported expenses that do not exist
  • Assets that are undervalued
  • Net deficits every month that do not result in building debts
  • Debts with no supporting documentation

Diligent and Experienced Representation

A diligent and experienced attorney, and a concerned client, are the keys to overcoming financial issues in a divorce case. The key to finding hidden assets is to spot inconsistencies in financial disclosures or patterns in financial dealings that do not coincide with other available information.  Many tools are available to assist divorcing spouses in this process, but they must be utilized properly and aggressively throughout the divorce.

by

Andrew D. Wheeer is a family law, elder law and appellate attorney, and the founder of The Wheeler Firm, PA. Andrew only take cases in those practice areas in order to focus on those special areas of the law. With offices in Fort Walton Beach and Miramar Beach, Andrew represents clients throughout Okaloosa and Walton counties, and has represented more than 2,000 clients over the course of the past 15 years. Andrew attended the Cumberland School of Law at Samford University, and graduated with a Juris Doctorate of law in 2002. While attending law school, Andrew was active in numerous legal writing opportunities, won awards for legal writing and was selected as a member of the Cumberland Law Review. Andrew was then accepted to the Cumberland Study Abroad Program and attended Durham University in Durham, England. Andrew also worked as a research assistant and intern for Chief Magistrate Judge John Ott in the Federal District Court for the Northern District of Alabama. Over the next 15 years, Andrew represented thousands of clients in divorce, adoption, custody modification proceedings, child support contempt actions, probate litigation, and counseled clients on elder law rights, including long-term care planning and general estate planning. Andrew believes clients desire representation from attorneys who have a thorough understanding of their specific legal issues. Therefore, after beginning his career as a general practitioner, Andrew chose to focus his career on a few specific areas of law - those that affect the family. He continues to concentrate on those areas today. Andrew regularly interacts with the public by speaking to groups of people on family and elder law topics, including long-term care planning and techniques to avoid probate litigation. In 2012, Andrew began teaching seminars on adoption law through the National Business Institute, providing guidance to other attorneys on proper procedures to secure adoptions of children. Andrew is married to Regina Wheeler, with whom he has a son, and the family resides in Santa Rosa Beach, Florida. Andrew serves as President of the Destin Kiwanis Club and is active in the local chambers of commerce.

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