Many clients do not have the time or inclination to organize their financial documentation, and most family law attorneys spend countless hours with support staff sifting through piles of checking and savings account statements, cancelled checks, quarterly statements, and other personal and business documents. In many cases, the client has the financial wherewithal to afford this service and is content with delegating it to his or her counsel. But, what about the client who wants to save on attorney’s fees? For such clients, knowing how to organize these documents ahead of time can truly expedite the divorce and reduce the cost of litigation.

The benefit of organizing your financial documents before you submit them to your divorce attorney is greater than just saving the expense of having your attorney’s staff sort through the information. In total, the benefits are three fold.

It will save you time and money;

It will help you develop an orderly understanding of your finances which will help you respond to questions accurately and effectively in depositions, settlement negotiations, and trial.

It will give you an organized starting point from which to conduct your post-divorce financial planning.
While many of the clients can very well afford to have their attorney’s office organize their documentation for them, most successful business people organize their own paperwork for the foregoing three reasons.

Of course, organizing your financial records not only gives you control over the information, but it is also appreciated by your attorney as well. While most family law attorneys have personnel who are extremely adept at organizing documentation for a divorce, previously organized documentation saves time and allows your attorney’s office to concentrate on other more constructive matters important to your divorce case.

If you wish to organize your financial records before consulting counsel, the following suggestions should prove useful.

Understand what the attorney needs before it is produced.

Most clients understand that current statements concerning assets and liabilities are relevant to the division of their assets and debts, but they do not understand that a transactional history (past statements) are necessary as well. These statements may be important on a number of issues, including a determination of whether separate property interests exist, a determination of additional sources of income for child and spousal support purposes, or the use of a date preceding the date of the final divorce trial should the court deem it appropriate.

In short, a history of each asset and debt with any monthly, quarterly, and annual statements regarding each asset and debt is always helpful.

When in doubt, produce it.

If you are unsure of a document’s usefulness, include it. A good attorney can determine quickly if a document is important or irrelevant. If it is irrelevant, it will either go back to the client or in the back of the file until the case is concluded or the client needs it back. If, however, you feel that something may be relevant, but do not produce it, the attorney has no ability to determine whether or not the document is relevant or important to your case.

Organize your records in the order the court considers them.

Generally, the court in a divorce will first determine whether grounds for divorce exists, then proceeds to divide assets and liabilities, before addressing issues of child support and spousal support. For purposes of organizing your documentation, the best approach is usually to first divide your documentation into four categories: assets, debts, income and expenses.

Organize your asset and debt documentation.

Divide the asset documentation by type of asset (real estate, automobiles, financial accounts, stocks and bonds, business entities, whole or universal life insurance, and personal property). Then, divide each set by individual financial institution and account number. Divide debt documentation in the same manner as the asset documentation and separate by financial institution and then by account number. Once the information is organized, type out an itemized list of the assets and debts to review with your counsel.

Organize your income and expense documentation.

Your income, child care expense, health insurance expense, and monthly expense documentation is usually important child and spousal support determination. Thus, I always suggest organizing this documentation into separate files such as: (i) income tax returns; (ii) separate files for each additional income source (i.e. a side consulting job or rental property); and (iii) separate files for expense documentation that supports a client’s monthly budget.

Make sure the contents of each of your files are in chronological order.

Go through each file and make sure the documentation is in chronological order from the most recent information to the oldest documentation that you have. By doing this, the attorney’s office only has to open the file to determine whether more recent documentation is needed or to view the most recent statement to determine the most current valuation you have on the asset or liability.

Remember to keep a full copy for your own records and review.

Not only should you keep a copy of the financial documentation you give your attorney for future use, but you should also keep an organized file of the pleadings and correspondences which your attorney sends to you. By doing this, you will save time and money, and eliminate costly communication errors.

Organize your monthly budget and reduce it to writing.

Most parties to a divorce action will also need to take time to complete a monthly budget. Remember that a divorce entails dividing one financial household into two. Thus, a monthly budget may be necessary to help you get through this trying financial time. Further, a monthly budget will often be required by the court if you or your spouse is pursuing temporary orders, child support, or spousal support. Regardless, careful consideration of your monthly expenses in advance will usually be invaluable to your divorce attorney in arguing your case regarding support issues.

It is important to remember that there are three types of expenses which should be given full consideration when you do your budget. First, there are one time expenses related to your separation from your spouse. Were you the one who moved out of the marital residence? Did you spend post-separation income or separate property in replacing furniture, paying a deposit on a rental property, or reestablishing yourself? If so, pay close attention to these expenses, itemize them in a statement, and thoroughly document them for consideration in the division of the marital estate.

Second, you need to remember not only the common month-to-month expenses in your budget, but also the less common once-per-year expenses. for example, quarterly insurance payments, taxes, and annual automobile registrations. It is usually helpful to go through your expenses for the past year in determining your budget. In doing this, annualize any expenses and calculate the monthly figure for these expenses. Personal financial software such as Quicken and Microsoft Money are excellent for this purpose, and many financial institutions allow clients to download up to six months of past checking account, savings account, and credit card transactions directly into your computer’s financial software via the internet. In this manner, you can have a detailed and accurate report of your expenses for the past several months in a matter of minutes.

One important point to make about your monthly budget is to be honest. Most parties to a divorce tend to under-represent their expenses either because they do not fully realize how much they spend throughout the year or they shave off expenses out of a misplaced sense of guilt or modesty. The best alternative is to be honest with yourself and your attorney regarding your monthly expenses. If your actual, honest, budget is deemed excessive by your divorce attorney, he or she will surely advise you accordingly and help you modify your budget before it is presented to the court. If your budget is too low, however, your attorney may not even question it, and you may have difficulty making ends meet.