How to Divide Property in Divorce: Financial Records You Should Have
In order to really be able to divide everything in a divorce, it’s first necessary to figure out what “everything” includes. For most people, it includes basic things, like a house, some bank accounts, a retirement account or two, a few cars, and some kids. In other cases, things get a little more complicated. We can have mutual funds, employee stock option plans, multiple pieces of real estate, inheritances, disability payments, or even money from personal injury law suits to divide. It can get very complicated very quickly, and though not everything is divisible in divorce, we have to figure out what “everything” is before we can even begin to talk about how to divide it between the two of you. Of course, not everything is divisible in divorce. Some things belong exclusively to one or the other of you as separate property, but before we can classify anything as marital, separate, or hybrid, we have to figure out what’s there.
It’s not just assets we’re talking about here, either. We have to figure out exactly what your liabilities are, too. We have to talk about mortgages (sometimes, even second or third mortgages), home equity lines of credit, credit card bills, car loans, and other notes, too. When a debt is accumulated during a marriage, it’s usually divisible during divorce, too (though not always). As much as we have to figure out what’s there, we have to figure out what’s owed, how the assets from the marriage are either going to help pay off those debts or how the parties plan to divide the debts and pay them back over time. Some debts or liabilities belong exclusively to one of the parties or the other, and other debts will have to be split or divided up.
So, how do we figure out what there is to divide?
Attorneys aren’t omniscient, so we don’t know what there is to divide until you tell us what there is. We need to see all sorts of documents to help show us what assets and liabilities there are. Otherwise, we’d have no way of knowing!
There’s really no way of knowing what’s there until you provide the proper documentation—mortgage statements, credit card bills, and bank account statements. You’ll have to be your own personal detective, and do some research and uncovering to figure out what you have. Probably, you already have a pretty good idea what you own, but tracking down all the statements can be time consuming and (more than a little) annoying.
You’ve probably got some of this stuff filed away with your important documents, but more of it will come in the mail in the next couple months as you’re trying to figure out what’s what. Just gather what’s important, and put it somewhere safe. That way, you’ll be ready to turn it over to your attorney when the time comes.
What do you mean by marital, separate, and hybrid property?
Just because you have something now doesn’t necessarily mean that you are going to get a share of it in the divorce. Virginia is an “equitable distribution” state, which means that everything will be divided in a manner that is considered “equitable.” “Equitable” means something like “fair,” but not exactly. The judge is going to consider a lot of things that went into the marriage, including the negative and positive monetary and nonmonetary contributions each person made to the family, to help determine what’s equitable. Not only that, but the law also divides property according to a classification scheme. Because of our statute, all the property that you have has to be classified as one of three things. Property can be either separate, marital, or hybrid.
Separate property is anything that was earned, purchased, or acquired before the marriage, or anything else that was inherited or given to you before or even during your marriage (as long as it was given to just you, and not you and your husband jointly). Separate property belongs to one party or the other exclusively, and isn’t divisible in the divorce.
Marital property is anything that was earned or acquired during the marriage, or anything that was given as a gift between husband and wife. Marital property belongs to both parties, and is subject to be divided in equitable distribution.
Hybrid property is a combination of marital and separate property. An asset is hybrid if it has elements of both marital and separate property. This happens most often with things like houses or retirement accounts. If one party had a house prior to marriage, but then after the marriage both parties continued to improve the residence and use marital funds to pay the mortgage, it is a hybrid asset. Usually, what happens with these assets is that the person who has a separate interest (the person who owned the property before marriage) has to buy out the interest of the other person. It doesn’t always work that way; sometimes we trade around interests, too, so that someone gives up their interest in one thing in exchange for a bigger interest in something else, or in exchange for the other spouse giving up their interest in a different hybrid asset.
What kinds of documents should I give my attorney?
Whatever documents you can find on your own, you should probably provide to your attorney because it will save you a lot of time, trouble, and money later on. You should go through your files, check your mail, and search any places in the marital residence where you think that important paper might be. Whatever you find that is related to the finances will be helpful for you, but specifically you should look for the following types of things:
1. Tax returns
2. Copies of any notes or loan documents signed by you or your husband, including first and second mortgages, if applicable, and home equity lines of credit
3. Benefit statements from your employer and your husband’s employer
4. Copies of statements from your (or your husband’s) pension plan, profit sharing plan, 401(k), IRA, or other retirement account
5. Whole or term life insurance policies on you, your husband, or your children
6. Short or long term disability policies on you or your husband
7. Homeowner’s insurance policy
8. Car insurance policy
9. Health insurance policy
10. Long term care insurance policies
11. Any other insurance policies
12. All bank account statements
13. All credit card statements
14. Brokerage statements
15. Statements of military benefits
16. Copy of credit history
17. Employment contracts
18. Partnership or buy/sell agreements
19. Inventory of lock boc
20. Copies of powers of attorney
21. Copies of wills or trusts where you or your husband were the beneficiary
22. Social security benefits statements
23. Pre nuptial agreement
24. Separation agreements
26. Real estate contracts
27. Mutual fund or annuity statements
Whatever you have that you think might be useful to your attorney, you should probably provide to your attorney. If it turns out that it’s not useful or relevant, it’s much easier to set the document aside than to frantically find it at the last minute if you had it and then chose not to include it. When in doubt, provide it to your attorney.
It’s best if you organize this information yourself as much as possible. You don’t have to organize it according to any particular scheme, but it’s best for you and for your attorney if you have everything organized according to some scheme. Your attorney should be able to glance at it quickly and easily and see what’s there, what’s not, and what’s still needed. Statements should be provided in order, and everything else should be clearly and carefully labeled so that anyone reading your file or going through your information would know exactly what each statement is. If you don’t, your attorney (or her paralegal or assistant) will have to spend time (and bill you accordingly) to go through all the material and organize it for you. You don’t want that!
If I can’t find these documents, what do I do?
Take a deep breath! Don’t panic! If you can’t find some of these documents, that’s okay.
Let’s talk about discovery. Discovery is the formal process that attorneys use to figure out what’s going on in a case. We can use discovery to find out about whatever the unique issue are in your particular case, so it can do anything at all, from figuring out what to do with your custody situation to figuring out what assets and liabilities there are in a marriage. There are a number of different things we can do, like ask questions or request specific documents, to get the information that we need.
You propound discovery on your husband to ask for the information you don’t have, and he’ll propound discovery on you to get the information he doesn’t have. That’s step one.
So, if discovery has been propounded on you, and you don’t have the documents, don’t panic. Technically, in discovery, you only have to provide documents that are in your care or control, so if it’s not something that you have a physical copy of, or something that you can request a statement from, then you can tell him that. He may have to resort to other measures to get copies of whatever information he’s looking for if you can’t find it.
That being said, of course, most things are relatively easy to get copies of. Most companies have a website, and you can almost always find information to contact them directly and request copies of statements or account information, or even log into an online client portal where you can get instant access to the information yourself.
If my husband has copies of the documents I need, what should I do?
We can use discovery to get information from your husband, if it’s something that is in his possession or control. If not, we can use other discovery methods to find whatever we need, so don’t worry.
It’s not a bad idea to ask him for copies of whatever he has when you separate. He may not be willing to give them to you, but, if he is, you could save a lot of money and trouble by getting them to your attorney without conducting formal discovery. Ask, just in case. Just because you don’t have access to the login information, or didn’t put your name on the account doesn’t mean that you should automatically just give up and wait for the discovery requests to go out. A lot of couples are willing to cooperate to keep their legal bills as low as possible. If you are, great. If not, we’ll get it another way, so don’t worry.
Again, whatever documents you can provide to your attorney early on in the process will help your attorney figure out how to move forward. The better idea your attorney has of your personal finances, the better advice she can give you. The less your attorney has to work to uncover information, the more complete the first draft of your agreement will be. It saves time and money to be as prepared as possible.
This part of the divorce process isn’t a whole lot of fun. It’s like doing your taxes, only it requires a lot more information. In most marriages, there are a lot of things that need to be divided. To do it accurately and effectively, your attorney needs you to help her paint as perfect a picture as possible of your life together. It will take a lot of digging and researching on your part, but you’re going to have to do it regardless. You might as well bite the bullet and get it over with! Your attorney will appreciate it and, in the long run, so will you!
If you’re ready to move forward with your divorce, give our office a call at (757) 425-5200, and we’ll help you set up a confidential appointment with one of our experienced divorce and custody attorneys.