It's become more common these days for couples to seek a low-cost divorce, often with only one party being represented and the other party sometimes retaining a lawyer to look over the final paperwork. In cases such as these, lawyers are often given a list of marital assets and marital debts and asked to help a party devise a reasonable settlement offer that can be presented to the other spouse.
In other cases, where the financial asset/debt picture is more complicated, some discovery is usually warranted, and the attorney for the spouse who doesn't handle the finances may -- or may not -- send out what is called in my office "the burdensome and oppressive discovery requests." This is usually a "canned" set of interrogatories and requests to produce documents. It consists of about 20 pages containing than 100 requests, some of them with 5 to 12 subparts. Sometimes a lawyer will tailor the requests to the specific case, deleting ones that do not apply (not often enough, in my experience) or adding specific interrogatories that inquire into certain more unusal assets owned by the parties. Responding to these requests can take my client 40 hours or more. I resist the temptation to engage in the "what comes around, goes around" approach. If I believe that the other spouse really doesn't have a clue about the finances and hasn't hidden any monies -- this latter being based upon my client's statement that the other spouse (usually the wife) doesn't have access to the assets, then I do not send out discovery requests to that party. Instead, I advise my client to work hard to produce complete and accurate records.
In other cases, I represent the "clueless spouse" -- the one who's been kept in the dark. Then I recommend to my client that this thorough discovery or some modification of it be made. Usually the spouse agrees. Sometimes she doesn't authorize discovery because she wants to save money.
Now suppose that you are the client who wants to save money on legal fees and expenses. What is most appropriate for you? What will protect you?
Recently, Michael Sherman a lawyer who writes the Alabama Family Law Blog, published an informative article that teaches a lesson by describing, in general, what occurred in a recent case he handled. Teaching by experience is a powerful tool. This is what Sherman had to say about whether clients should handcuff their lawyers and insist upon no discovery and how a reasonable amount of discovery done through low-cost discovery methods can make a huge difference in whether or not all marital assets are discovered and divided. Sherman wrote:
"In your divorce case, you may hear your lawyer talk about the 'discovery process.' Discovery is essentially the legal process by which lawyers can obtain information necessary for your case (such as assets, debts, income, and other factual information). This often will involve written requests to your spouse to produce certain documents, a request for them to file written answers to the lawyer's written questions (called interrogatories), subpoenas for documents from banks, credit card companies, etc.
"Often lawyers will use multiple methods of discovery in an effort to obtain complete information. I have had clients ask me not to pursue discovery for fear of the costs that would be incurred. This is often short sighted. An example from a recent case I had is instructive.
"I was representing a wife in a divorce case. The husband had complete control of all of the finances and the wife was not even aware of all of the assets. Through the discovery we sent to the husband he produced a spreadsheet that he claimed were the assets. The wife was surprised at the amount of assets that were disclosed. They were much more than she thought they had. But, the husband showed what he claimed to be the fair market value and the loans owed on them. In all, he showed a net equity of less than $500,000. It was more than the wife suspected, but something told me it was less than it should be. So, we subpoenaed his bank records.
"The bank produced documents to us that included the husband's loan application and the net worth statement that he provided to the bank. And, you've probably guessed the punch line - the net worth statement he provided to the bank included assets that he had not disclosed on the financial statement he provided to us, and the values were higher. In all, the difference was that he showed a net worth on the financial statement provided to the bank that was nearly $2.5 million dollars - increasing the marital estate for the divorce judge to divide by about $2 million!
"My client now understands it was to her benefit to make sure we did a thorough job of discovery. Obviously this example (though completely true) is not what usually happens - at least not to this degree. But, the lesson is a good one - make sure that your lawyer does a thorough job of discovery. And, make sure that you let him."
I'd like to add three thoughts to this:
(1) This formal discovery is the only chance you will have to discover the existence and worth of the marital assets. Once the divorce is final, you will no longer have the opportunity to find out whether your spouse concealed any assets.
(2) In Michigan, and I suspect elsewhere, there is a short time period within which to seek a new trial or modification of a judgment if you suddenly discover some hidden assets.
(3) In Michigan, if a trial court learns that one of the spouses has concealed assets, the trial court has the option to award 100% of the concealed assets to the innocent spouse. Mind you, this is not an automatic forfeiture. The rule isn't "conceal assets and the court will automatically award all that is concealed to the other spouse." The rule is "conceal assets and you run a high risk have having those assets awarded in their entirety to your spouse." Is that incentive enough? It should be if there is a possiblity that something quite valuable may be concealed.
Thanks to Michael Sherman at the Alabama Law Blog for his insightful comments.
Source: "Discovering Hidden Assets" by Michael Sherman, published at his Alabama Family Law Blog.
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