Effective January 2013, there are new rules that apply for the financial disclosure form in complex divorces and front loaded discovery requirements for divorce cases in general. The new rules are available at the Nevada Supreme Court’s website.
Reading the new rules, we love the fact that you have to be diligent and prove your expenses and income. But, one cannot help but give pause to the difficulties that some clients will inevitably have in complying with all that is required up front. This includes:
- 6 months of statements of documents for bank accounts, credit cards, loans/mortgages, and retirement accounts for the period prior to the service of the summons and complaint;
- Real property documents, i.e. deeds, purchase agreements, etc.
- Promissory notes and any money held in escrow or deposit that may be payable;
- Any loan applications made in the prior 12 months;
- All monthly or periodic statements for insurance and policies;
- Evidence of any receivable;
- Business tax returns for the prior 2 (fiscal) years;
- 2 calendar years of income information available in W-2’s, 1099’s, K-1’s, and year-to-date, i.e. paycheck stubs, for the prior 6 months;
- Any document that would assist in valuing real or personal property;
- As list of all personal property worth more than $200.00.
While this list is a summary, it is more comprehensive than what you will need to prepare a tax return and could be extremely cumbersome for clients and their lawyers. Moreover, parties will have a duty to continue to supplement this initial up-front disclosure as the new information comes in (within 14 days of any change).
As a lawyer, the concern that arises here has to do with the work to produce this, and counsel not only reviewing the documents to see that they are responsive to the law, but also complete. This will be time consuming and will increase legal fees right out the box. In some cases, counsel can get clients to settle their case by telling them they will have to do this later, and if they want to avoid the hassle, settlement early is a way to do that. Indeed, for those cases that you think could be concluded quickly, preparing the personal property list alone could cause otherwise amicable couples to become entrenched in what items are worth, i.e. sparking a fight over what the tools and camping equipment is worth. The point – they end up fighting unnecessarily.
Despite these concerns, divorcing parties need to be aware and provide this information to their attorney or opposing party right away, since these disclosures are due at the same time as the General Financial Disclosure Form, which is 30 days after service of an answer. Indeed, a party that is thinking of filing may want to wait until they have gathered everything first, then file so everything is ready to disclose without issue.
The lawyers at SLP will be ready to respond – but will the clients?