In this article, you will discover:
- Mandatory financial information to be shared with the other party.
- The purpose of disclosures during the discovery process.
- When third-party witnesses can benefit your case.
Discovery in a contested divorce is the process of disclosing information, so you don’t get to a trial with the other side whipping out evidence you’ve never seen before. In New York, this exchange can happen even before the preliminary conference. Parties may exchange supporting documents, like net worth statements, before the conference gets underway. Sometimes, this transfer of information even kicks off settlement negotiations.
Usually, the net worth statement is preliminary to settlement negotiations unless you are confident you know what the other side has. Perhaps you have filled out joint tax returns and know what assets the other side has. We need this statement for negotiations or a signed written waiver to move forward without it.
Other times discovery occurs before the preliminary conference to aid in settlement negotiations. Suppose either side wants to clarify specific issues, such as premarital credits, retirement accounts established before the marriage, or money spent in questionable ways. In that case, this information is often shared early on.
For instance, you request a premarital credit. You took money earned before the marriage to put towards the down payment of a house. Often, you need to get documentation to show both ends of the transaction. We need to prove where the money came from and that the same money was put down at the closing. These special exchanges of information can happen early in the process.
According to the preliminary conference order, mandatory disclosure is three years’ worth of financial statements must be produced by both sides from all accounts:
- Tax Returns (& W-2’s/1099’s)
- Bank accounts (Checking & Savings)
- Credit card/debt
- Retirement accounts (pensions, IRS’s, 401k’s, annuities, deferred comp, etc.)
If you do not have paper copies of your financial statements, it is suggested that you access your provider’s website and download the statements from there. If you do not have copies of your tax returns and cannot retrieve them from your tax preparer, then you should obtain the tax transcripts by accessing IRS’ website (http://www.irs.gov/Individuals/Get-Transcript).
Parties often ask for more documentation than just the mandatory disclosure. This request is captured in the demand for discovery and inspection. Each side comes up with a list of documents they want produced by the other side. Often, there are about 20 to 30 categories of documents exchanged. If either side thinks the other is abusing that—asking for too much or irrelevant documentation—they have 20 days to object. If they miss the 20-day deadline, they have to answer it whether they like it or not.
Other typical demands include:
Demands For Discovery & Inspection – This is usually a vastly expanded list (beyond the “mandatory disclosure” list) of financial documents one must generally provide.
Interrogatories – A list typically up to 25 questions you must answer under oath.
Expert Witness Disclosure – A list of witnesses the other will produce at trial.
Audio, Video, Or Picture Evidence – Any evidence of this type that’s going to be introduced at trial.
Statements – The oral or written statements of the other party so that there are no surprises at trial.
In a contested divorce case, these typical demands for disclosure are made after the preliminary conference. If one has an objection to providing any of this disclosure, s/he must register the particularized objection within 20 days of getting served with the demand – otherwise the Court may rule s/he effectively waived the right to object.
One of the aims of the disclosure is obtaining as much evidence the other side plans to produce as possible, apart from disclosure on custody and visitation issues. There are some exceptions to discuss with your attorney around the appropriateness of asking for disclosure related to child-related issues.
There are statutory factors on asset distribution, child support maintenance, etc., that allow you to ask the other side if they have any physical or mental health issues. Sometimes issues are intertwined between custody, visitation, and financial issues – such as health (physical & mental) and domestic violence (now a statutory factor on both maintenance & asset distribution). In obtaining information on finances, you can ask if the other side has any inhibitions in working or accrual of assets. You can also ask if another side has a drug issue through the financial disclosure. You have a right to know where they’re spending that money. It’s an arguable marital waste issue if they spend marital money on drugs.
In contested cases, people often do depositions of both parties, and sometimes third parties. Depositions are where the parties are grilled under oath in the opposing attorney’s conference room (with a reporter present). Some of the advantages in doing them are that they serve to lock in a party’s testimony (so the attorney isn’t questioning a witness for the first time at trial), and to learn information one cannot glean from financial documents themselves. See an expanded version of what goes on at a preliminary conference by referring to the court’s rule – 22 NYCRR §202.16(f) – http://www.nycourts.gov/rules/trialcourts/202.shtml#16. Oftentimes depositions are held off on until the very end of the case, simply because they are extremely expensive to do – in order to do a deposition, they are looking at a $5,000 cost. If the case still can’t settle, we’ll usually set up deposition dates at the compliance conference. If we still can’t settle at the final court date (called a “pre-trial conference”), all the discovery has been exchanged and all the forensic reports are in, then the Judge will schedule a trial.
Third parties with knowledge of your marriage can be questioned at a deposition in a contested divorce. If you don’t have a really good reason for asking questions of that third party, though, don’t bother. Get the information from another source. There are also ways of subpoenaing documents. You don’t necessarily have to ask questions of the third party – you can just ask them to produce certain documents.
To have them answer questions at a deposition, you would serve a deposition notice on that third party, along with a third-party subpoena and witness fee. Unless you anticipate they will be hostile or evade being served, you want to coordinate with the other party as best as possible to ensure they are available to appear. You will also be responsible for reimbursing them for any cost associated with travel for the deposition unless they appear virtually. In these post-pandemic days, virtual depositions are commonplace.
Accountants can be included in deposition questioning. You may want to subpoena accountants even after reviewing the documentation they have prepared to see what they discussed with this person. Generally, there’s no privilege between an accountant and a party. What they discuss and the information provided may be relevant in your case. For example, if someone owns their own business and you suspect they are hiding money, you will want to ask them specific questions. What did you use to put down all these business expenses on their Schedule C? Did you see receipts or invoices?
If the accountant explains the figures came directly from the party themselves, the party cannot later blame the accountant when you go to trial. They will be stuck with those figures, and they’re going to have to justify them.
You should discuss with your attorney whether to send out subpoenas for documents along the way – as well as whether to retain experts such as a private investigator, forensic accountant or forensic psychologist (the latter particularly on contested custody cases). Private investigators and/or forensic accountants utilize many more tools to discover hidden income/assets – and do so often more cheaply and more effectively than an attorney would otherwise be able to do. If you are contending there are hidden income, assets and/or property, then one should strongly consider hiring one if not both of these experts.