Negotiating alimony or equitable distribution without financial declarations

How many times have I been seduced by an opposing attorney’s siren call to negotiate alimony or property division issues before that attorney’s client will provide me an executed financial declaration? Like some drunken floozy, I promise myself never to let it happen again, only to trip up on occasion and only to wake up feeling screwed. Consider this blog a public declaration of financial declaration “sobriety,” intended to keep me from letting my guard down again.

While it is possible to fairly negotiate child support issues without an executed financial declaration–assuming one can get verification of the other party’s income, work-related child care expenses, and child-related health insurance expense–one needs the fuller disclosure of an executed financial declaration to properly negotiate alimony and equitable distribution. Be wary of attorneys wanting to negotiate these issues before providing such disclosure, especially if that attorney has filed a motion for temporary relief or has the client seeking alimony. Be especially wary when that attorney wants your client to provide financial disclosure before having his or her client provides that disclosure.

There are a couple of reasons I want this financial disclosure before negotiating. Before I can access the other party’s need for alimony I need to see that party’s claimed expenses and determine how much of that party’s “need” can be met through his or her income and assets. Forcing that party to commit to claimed expenses–even if it is anticipated expenses–is invaluable. Often litigants will demand alimony that is in excess of the need that would be demonstrated by their financial declaration. Thus, a financial declaration can be used to undermine the amount of the demand. Other times litigants will inflate expenses to justify alimony. One can then target discovery to prove these expenses are inflated and demonstrate a lesser need for alimony in settlement negotiations or at trial.

Further, while it is reasonable for the opposing party to not have complete knowledge about my client’s assets and debts when providing initial financial disclosure, there is no reason that party should not be able to list and value his or her own assets and debts before the initial temporary hearing or before receiving my client’s financial disclosure.

Conversely, my client may initially be unaware of the other party’s assets and debts. Negotiating a distribution of all marital assets and debts–even if on a temporary basis–cannot be properly done without full knowledge of the other party’s assets and debts. If the other side won’t provide this financial disclosure the negotiation can result in a division of my client’s assets while the other party’s assets are treated solely as the other party’s.

For these reasons, I am especially wary of attorneys who demand my client provide financial disclosure before they provide financial disclosure. Too often my client’s prior disclosure can be a tool to “shape” the other party’s financial disclosure. If my client fails to list one of the other party’s assets on the financial declaration, the other party has incentive to not list it either. If my client’s financial declaration demonstrates an excess of net income minus expenses of a particular dollar amount, the other party has an incident to list expenses that demonstrate a need for a similar amount of alimony.

For these reasons, I try to have my client’s financial declaration completed shortly after being retained and preferably when or shortly after filing a motion for temporary relief. This way I am prepared to begin negotiating as soon as the other party is able to complete his or her financial declaration. However when the other party demands to negotiate financial issues but won’t provide financial disclosure, I strive–as noted above without 100% success–to defect the request until such disclosure is provided. And I categorically refuse to provide financial disclosure until the other side is willing and able to do so.

At times, I have even resorted to filing a motion to compel a financial declaration–a motion authorized by Rule 20(d), SCRFC when such financial disclosure has not been provided within 45 days of the service of the complaint. It’s a useful remedy that few other attorneys employ and greatly reduces one’s chance of being a financial declaration floozy.

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