Business owners and company executives tend to have access to highly sensitive documents and corporate records. Within those records, most anything could be contained, like financial statements, proprietary information, and clientele lists. Allowing that information to be seen by just anyone can be a serious problem, so steps are always taken to keep them locked up tight.
However, a divorce could potentially jeopardize the security and privacy of corporate records. In a divorce, both parties have the right to see any information owned or controlled by the other that could be related to their shared assets or other aspects of their divorce. If you are divorcing as a corporate executive, will you have to share your corporate records with your spouse? Or, if your spouse is in a power position in a company, can you view their corporate records?
Discovering the Limits of the Discovery Process
The typical divorce process will have a step called the “discovery process.” As the name implies, the two divorcing parties and their attorneys ask the other party to provide any and all information that could be relevant to their divorce. In California, the parties are expected to act with honesty, disclosing everything without probing, or a court’s orders through a subpoena. Theoretically, you or your spouse might be required to reveal corporate records, such as any that show the company’s value and how that would be split in property division.
What has to be revealed to a spouse must be considered as “reasonable,” though. If there is no apparent connection between a corporate record and a divorce process, then that particular record will likely not need to be mandatorily exposed during the discovery process.
Asking the following questions can help you determine if a corporate record is relevant enough to reveal in discovery:
- Are both spouses’ names on the record or document?
- Does any of the information relate directly to company value, profits, or asset control?
- Can the information be easily accessed by anyone within the company? Or, by an outside third party?
- Would sharing the document significantly jeopardize the rights or interests of a nonparty?
- Is there available an alternative method or document that would not require the corporate record being shared with both spouses?
No matter how important and private you think a corporate record might be, you should not decide to conceal it from your spouse unless you first consult with an attorney experienced with business divorces, or high net worth divorces. If you don’t disclose something in discovery that should have been shared, then it could cause you to experience negative consequences in the divorce. At best, the judge will disfavor you in decisions that would have otherwise been 50-50.
Is Your Spouse Hiding Important Corporate Records?
Sometimes people make mistakes and don’t realize they kept important corporate records relevant to the divorce to themselves. Or, sometimes, spouses intentionally hide information, hoping it will not come up. What can you do if you suspect your spouse has not disclosed all the necessary corporate records to you or your divorce attorney?
Three useful legal options to consider are:
- Business valuation: Has your spouse disclosed corporate records related to the value of their company, or of their shares of a company, but things don’t seem to add up? A business valuation conducted by a third party can help get a new perspective on the value of a company’s profits, growth or depreciation, and tangible or intangible properties.
- Forensic accountant: For high net worth divorces involving a corporate executive, it is not unusual to expect there to be assets and finances woven into highly complex situations. For example, multiple bank accounts could be holding onto assets of the company. The help of a forensic accountant may be necessary. Forensic accounts specialized in in-depth financial analyses with a focus on how they may influence or occur in litigation. If a forensic accountant can’t reveal hidden corporate records, then there might not be any to reveal.
- Subpoena: Lastly, when you and your divorce attorney have good reason to believe corporate records are being concealed, or you know there are corporate records not being shared, you can use a subpoena to demand them. A subpoena is a court order for someone to show up to court for a particular reason, such as providing specific documents. It is up to the court to decide if the documents being demanded really are relevant enough to the divorce to bring them forth in the subpoena, or if it makes more sense to keep them private.
Why Protecting Corporate Records is Important
You might be wondering why you should be so serious about revealing only certain corporate records to your spouse in divorce. What you might not know is that anything that goes into use in a divorce court is effectively public record afterwards. Therefore, highly sensitive corporate records need to be protected when possible, or else the woodworks and secrets of your business could become public knowledge.
Orange County Attorneys Helping with Complex Corporate Divorces
Gill Law Group, PC helps clients deal with all types of complex, high stakes divorces, including those related to divorcing company executives and business owners. People throughout Orange County trust in us to do the right thing and uphold their best interests as their divorce progresses. We are available to represent you, whether you have access to corporate records, or your spouse does.
Please give us a call at (949) 681-9952 today to request a complimentary initial consultation with our team.