By: Bruce Friedman
Your divorce case may encompass complex financial issues and assets that require careful analysis of voluminous records. These issues may include the “tracing” of documents to prove that property is separate property rather than marital property. For example, if you owned a brokerage account before your marriage, to protect those separate assets you may need to obtain statements from the date of marriage to the present and then analyze those statements for commingling of your pre-marital assets with those earned during the marriage.
Your financial advisor can help you obtain complete records needed to prove the value of assets, and can assist the court in fully understanding the nature of complex assets such as private equity investments, hedge funds, and the like.
A financial advisor may also help determine the “income tax basis” of stocks, bonds, mutual funds, and other financial investments, to allow the equitable division of marital property. For example, some investments will have unrealized taxable gains that will trigger future income tax liability, and having this information during the divorce process helps reduce or eliminate the unfairness of offsetting assets that will not have tax consequences (e.g., cash) with assets that will have tax consequences.
We often need to determine a reasonable rate of return that can be earned on investible assets to aid in the calculation of income to each party. Your financial advisor may be able to help with this calculation which can impact spousal and child support. The advisor may also assist in determining if a property settlement will provide adequate income to meet your needs down the road.
In most cases you will be required to complete financial statements listing your assets and debts. Your financial advisor can assist with the preparation of these documents when there are questions about the nature and extent of your holdings, and to make sure that full disclosure has been made to the court.
In some cases, we provide guidance to financial advisors to make sure your separate assets are protected from allegations that the assets have been commingled with marital property, and it may be necessary to ask your financial advisor to restructure your investments to avoid commingling between marital property and separate property.
Finally, your advisor will often assist in dividing investments with your spouse after your divorce, or in setting up new accounts to receive investments held by your spouse.
The family law attorneys at Paule, Camazine & Blumenthal have substantial experience in cases involving complex financial issues and assets, and we routinely work with financial advisors to deliver timely and cost effective services for our clients.