Donald Trump Jr. has filed an application in court demanding details of his estranged wife’s net worth, following reports that she inherited several million dollars from her late father. While the parties involved make this move attention-grabbing, demands for Statements of Net Worth (called “Financial Affidavits” in some states) are standard in any divorce action. What is likely to be more relevant in Don Jr’s. divorce is whether he has a claim to any inheritance Vanessa Trump received during their marriage, and what is at stake if either party has assets that they fail to disclose.
What is a Statement of Net Worth?
A Statement of Net Worth is a sworn statement, usually exchanged at the commencement of any action for divorce, that outlines each party’s income, assets, expenses, and outstanding debts.
It is used to assess how much money makes up the marital pot and, therefore, is available to be divided between the parties. Failure to disclose assets at this stage, while sadly not uncommon, can have serious consequences. The court can take negative inference from any deliberate withholding of financial information, which means it can penalize the offending spouse when deciding who gets what in divorce proceedings
Looking for Assets – Marital and Separate
Attorneys use documents such as bank statements and bills to look for evidence that all assets have been accounted for in the Statement of Net Worth.
For example, a query by a defendant’s attorney into a number of small, periodic payments to an unknown account once led to the discovery of an offshore property valued at several million dollars that the other spouse knew nothing about. When deception like this is discovered, it creates major credibility issues for the offending spouse in the eyes of the court and can lead to legal fees being awarded against them to compensate the other party for the time taken to make this discovery.
Even the omission of minor assets on the Statement of Net Worth can raise the suspicion of further dishonesty and spur deeper investigation – and even the issuing of subpoenas where there is evidence of missing assets – costing additional time and money in the divorce proceedings.
An important point to note is that disclosing assets on a Statement of Net Worth does not necessarily mean that those assets will form part of the marital pot. In the case of the Trumps, if Vanessa kept her inheritance separate and apart from marital funds, never “comingling it” with the couple’s joint monies, it will not be subject to equitable distribution, i.e. it can’t be considered a marital asset that must be divided upon divorce. That said, any income received on this inheritance can be used in the calculation of child support, which takes all income from all sources into account, not just marital funds. Thus, discovery of separate property is relevant for support purposes.
Dissipation of Marital Assets
Another factor to be considered when making disclosures on a Statement of Net Worth is the issue of wasteful dissipation of marital assets.
Wasteful dissipation is defined as “the use of an asset for an illegal or inequitable purpose, such as a spouse’s use of marital property for personal benefit when a divorce is imminent” and generally during the marriage. As all expenses must be set forth on the Statement of Net Worth, expenses for extramarital affairs, (which would also constitute as wasteful dissipation of marital assets) also must be revealed in the expense section. During the discovery process, credit card and bank statements will be examined to substantiate the expense section of the Statement of Net Worth.
Thus, a very relevant consideration in any divorce including those involving prominent public figures is if either spouse has used marital funds to, for example; conceal an affair, pay-off an accuser or settle a legal action resulting from improper behavior. If marital funds are utilized in this way, such expenses can be uncovered through numerous discovery devices, starting with an examination of the Statement of Net Worth. The use of marital monies in this way will be considered a wasteful dissipation, and, if present, the innocent spouse can claim a portion or all those funds back in divorce proceedings.
So, while Don Jr.’s attorney will be looking closely at any inheritance his wife received during their marriage, it is a safe bet that Vanessa’s attorneys will also be combing through his Statement of Net Worth to make sure all assets are accounted for and that no marital funds were dissipated.
Lisa Zeiderman, Esq., a Managing Partner of the law firm of Miller Zeiderman & Wiederkehr, LLP., focuses her law practice solely in Matrimonial and Family Law. As both an Attorney and a Certified Divorce Financial Analyst®, Ms. Zeiderman is uniquely equipped to understand, negotiate and if necessary litigate high net worth and/or complex financial matters. www.mzwnylaw.com