Page 30 - Family Law Services

not subject to division. Ultimately, whether property is included or excluded is determined by the trier of
fact. For instance, assets and liabilities may have been placed in trust for one of the parties, may be the
property of the children, or may be one of the parties’ separate property. The assets and liabilities that
may be relevant should be inventoried at the beginning of the process, even though they may not ulti-
mately be included in the marital estate.

Asset, liability, and income identification is often a difficult task. Spouses sometimes are unaware of the
requirements for disclosure of financial information that exist in their jurisdiction. Each state has its own
rules related to the required disclosures. Several methods can be used to check the completeness of in-
formation received in discovery. Often, CPAs assist the attorney when drafting production requests that
may identify specific needs for identifying assets, liabilities, and determining income.

The following sections address examples of documents and resources to be considered when identifying
assets, liabilities, and income.

Tax Returns

For reported taxable income-producing assets, a good source of information to begin with is the parties’
individual income tax returns. Personal federal income tax returns (IRS Form 1040) and the attached
schedules provide details regarding the income of the individuals. The source of the income reported
may be from the parties’ assets, the details of which may be found on the tax returns and the supporting
schedules. For example, interest and dividend income as reported on Schedule B of Form 1040 may
provide information about the underlying bank or brokerage accounts, or both, from which the income is
derived. Many experts request federal, state, and local tax returns for the last three to five years as a
starting point for their analysis.

Bank and Brokerage Statements

One or both spouses may be acquiring or dissipating assets directly by writing checks or drafts, borrow-
ing money, or removing cash from accounts. More difficult, but equally important, is the analysis of
what may be missing from financial accounts, such as undeposited paychecks, interest and dividend
checks, and company expense reimbursements.

Lender Financial Statements

Spouses are often required to submit personal financial statements to lenders. The statements may in-
clude details of assets, liabilities, income, expense, or other commitments. Those financial statements
can be prepared in anticipation of loans to acquire assets, refinance debt, or cover personal guarantees.
The types of assets securing the debt may be real estate, either business or personal; automobiles; or se-
curities. If the couple recently purchased a home, car, or other asset with credit, chances are a personal
financial statement is available, prepared in the years leading up to the parties’ separation, postsepara-
tion, or both. If this document is not disclosed but is known to exist, a subpoena to the lender may be a
good way to obtain it.

Insurance Policies

A review of insurance policies may also assist with identifying assets that are not disclosed elsewhere.
These can include, but are not limited to, valuables, collectibles, antiques, and automobiles.

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