What is Financial Discovery in California Divorce?

When it comes to family law cases, particularly those involving marriages or registered domestic partnerships, financial discovery can play a crucial role in obtaining essential information for negotiation or litigation. This process involves thorough investigation of all financial aspects of a marriage or partnership, providing a clear and accurate financial picture that can be vital for fair resolution.

Understanding the Necessity of Financial Discovery

Not every family law case requires financial discovery. However, in situations where critical financial information is withheld or not readily available, it becomes essential to consider this process to ensure a just and equitable resolution. Before embarking on the journey of financial discovery, it is crucial to weigh its significance against potential costs and animosity that may arise during the process.

When to Consider Financial Discovery

Certain situations may prompt you to consider strategizing a plan for financial discovery:

Lack of Access to Family Finances

If your spouse maintained complete control over all financial matters during your marriage or partnership, you may find it necessary to seek financial discovery to gain insight into your shared financial picture.

Separate Accounts During Marriage

Having separate accounts during your marriage can make it challenging to determine joint earnings and contributions, making financial discovery essential for accurate financial assessment.

Refusal to Provide Income or Asset Information

If your ex-partner is unwilling to disclose their income or provide information about their assets, financial discovery becomes crucial to ensure transparency and fairness.

Questions Regarding Joint Earnings and Separate Estate

You may need more information to ascertain whether joint earnings were rightfully contributed to your ex-partner’s separate estate, which can significantly impact the division of assets.

Business Ownership During Marriage

In cases where one or both partners owned a business during the marriage, financial discovery can help assess its value and determine its impact on asset division.

Tracking Liquidated Assets

If there are suspicions that an asset, such as a retirement account, was liquidated during the marriage, financial discovery can trace the funds’ whereabouts.

Determining Community Property

Financial discovery can be instrumental in distinguishing whether certain assets or debts are wholly or partially community property.

Valuing Assets at the Date of Separation

In order to divide assets fairly, it may be necessary to determine their value at the claimed date of separation, which can be achieved through financial discovery.

Information for Child Support or Spousal Support Strategy

Gaining access to your ex-partner’s earning history is essential for creating a strategic approach to seeking child support or spousal support.

Validating Use of Gift or Inheritance

If one spouse claims to have used a gift or inheritance to purchase property during the marriage, financial discovery can validate the claim.

Ownership of Business Entities

When your ex-partner owns a business entity, such as a corporation or LLC, financial discovery can provide insight into its financial standing.

Overcoming Financial Constraints in Pursuing Discovery

Financial discovery can indeed be expensive. If you lack the funds to conduct discovery, consider seeking a court order for payment of lawyer fees and costs from joint funds or your spouse’s separate property. Many states authorize awards of fees and costs to ensure both parties can litigate properly.

Developing a Discovery Plan

Before commencing financial discovery, it is essential to develop a well-thought-out discovery plan and strategy. A successful discovery plan typically combines informal disclosure with formal discovery methods. This may involve subpoenaing documents or requesting your spouse to respond to specific written questions under penalty of perjury.

Different Types of Discovery to Consider

The Family Code and the Civil Code of Procedure sanction various forms of discovery for family law cases, including:

Interrogatories

Written requests for information about divorce-related issues, such as bank accounts and retirement accounts.

Document Inspection Demands

Requests for specific documents that can provide critical financial information.

Deposition Subpoenas

In-person interviews in front of a court reporter, where parties or witnesses can be compelled to provide information.

Subpoenas

Used to obtain documents directly from third-party institutions, employers, or witnesses.

Procedural Considerations

It’s important to adhere to the procedural requirements when conducting financial discovery. Failure to do so could result in the waiver of your right to obtain essential information.

Conclusion

Financial discovery is a valuable tool for obtaining crucial information necessary for negotiating or litigating family law cases. When conducted thoughtfully and within the framework of the law, financial discovery can pave the way for fair and equitable settlements. Remember to consider the potential costs and benefits carefully and always seek professional legal advice to navigate the complexities of the process successfully.

FAQs

1. How much does financial discovery typically cost?

The cost of financial discovery can vary significantly based on the complexity of the case and the information sought. It’s advisable to discuss potential costs with your attorney and explore cost-sharing options if needed.

2. Can financial discovery be used to prove hidden assets?

Yes, financial discovery can be instrumental in uncovering hidden assets, as it allows for a comprehensive investigation of all financial aspects.

3. What happens if my spouse refuses to comply with the discovery requests?

If your spouse fails to respond adequately to the discovery requests, you may seek court intervention and request sanctions to ensure compliance.

4. How long does financial discovery usually take?

The duration of financial discovery can vary based on the scope of information sought and the cooperation of the parties involved. It can range from several weeks to several months.

5. Can I conduct financial discovery on my own without an attorney?

While it is possible to conduct financial discovery without an attorney, it is highly recommended to seek legal representation to navigate the complexities and ensure a successful process.