In the next several posts, we’ll take a look at the 5 worst divorce mistakes you can make, as compiled by family law attorneys and marriage counselors across America. If you’re seeking a divorce, or the process has already begun, we hope these words of advice can help you avoid the pitfalls of the end of matrimony. Last time, we looked at Mistake #3: Sharing is (Un)Caring. This is the fourth in our series.
MISTAKE #4: HIDDEN MONEY, OR INCOMPLETE DISCLOSURE
Another costly mistake that many couples make in divorce cases is they fail to disclose all of their assets or debts. When you take a close look at it, divorce amounts to the break up of a business partnership as much as a matrimonial partnership. If you don’t know what went into the partnership it can’t be split it up appropriately, accurately and completely.
That’s where the Rule 401 Financial Statement comes in. It is also known as Supplemental Probate Court Rule 401. Often, through laziness or even with deceitful intentions, divorcing couples fail to put all of their information completely and accurately on their Rule 401.
Financial statements have serious legal repercussions. They are signed under “the pains and penalties of perjury” as being true, accurate, and complete statements of all of your income, expenses, assets and liabilities. The consequences of lying or filing an incomplete Financial Statement are severe, and a judge could find you to be an unreliable witness at trial. Under that scenario, the court would take all relevant testimony in your divorce case from your spouse – only. Also, if a settlement is reached in your case and it is later discovered that a particular asset was left off your Financial Statement, that settlement could be voided for fraud. Those assets would then be awarded to your spouse. One of the most common ways an attorney will cross-examine a party in a divorce case is to compare different financial statements filed during the course of the case. If you are careless filling out your Rule 401, that often leads to inconsistencies that can make you look like a liar. That puts you on the edge of perjury – a very serious offense, indeed.
Legal experts caution clients to not be foolish enough to believe they can hide assets. They are almost always found out – and when they are – judges are motivated to lean favorably toward the other party and award them an uneven share of the known – and discovered assets. The party attempting to cover up details is likely to have their testimony entered under a cloud of suspicion from that point on, experts say.
In Massachusetts, for instance, the Supplemental Probate Court Rule 401 provides that, within 45 days after the date of service of the divorce summons, each party must provide the other party a “complete and accurate financial statement” showing, as much as possible, the assets, liabilities and current income and expenses of both parties and children involved in the divorce case. Either party may request a Financial Statement from the other every 90 days, and if such a written request is made, the party has 10 days to file the documents.
Facing a divorce, you should immediately begin working on your Financial Statement and provide a draft copy to your attorney. It is very important that you complete this document accurately, and completely.
In fact, it is against the law to fail to do so.
In short, take the Financial Statement seriously and don’t lie. Full disclosure is the key to a reasonable and quick settlement. Failure to disclose will almost certainly ensure drawn out and expensive litigation.