Financial Disclosure Best Practices
Financial Disclosure Best Practices for Professionals are guidelines that encourage professionals towards a level of competency that protects both clients and professionals from liability risks.
Financial Disclosure Best Practices
Financial disclosure is the foundation on which family law is built. It underpins the validity of all contracts in the realm of family law and is a requirement for any agreement to be considered binding and enforceable. In many cases, levels of trust have deteriorated so much between separating individuals that a full financial disclosure is the only thing that can convince them to have faith in the negotiation process. In acknowledgement of its importance in family law, professional best practices are encouraged regarding the financial disclosure process. Professionals should:
- Speak with clients about what full and frank disclosure actually means and communicate this to them in writing. Help them to understand that a failure to fully disclose can delay their family law process, damage their credibility, or even negate the result of their agreement. Explain that financial disclosure is the basis of trust in the negotiation process and that both individuals will be completing it to ensure that they enter negotiations fully informed. Remind the clients that the requirement to disclose is an ongoing one.
- Encourage fast and honest disclosure at the earliest stage of the family law process. Let the client know that the speed at which they complete disclosure can have a direct impact on the cost of the process.
- Develop a framework for administering financial disclosure. Ensure that it is given in an orderly, standardized format with strict timetabling. Financial disclosure is not meant to be given to a client and then ignored for weeks a time. Both the client and professional should be held to a reasonable, defined schedule.
- Create a detailed checklist or questionnaire that will assist clients in identifying the documents that will be required. Do not expect that the client will understand the significance or need for every document, so be prepared to explain which documents must be collected and why.
- Design your process or procedure such that it will prevent a client from knowingly, or unknowingly, misleading their spouse or the professionals.
- Follow-up with the client repeatedly throughout the financial disclosure process. A professional should take an active role in the process rather than handing the client blank forms and returning at a later date, to review the result. Particularly in cases where the other party was the one who looked after household finances, the client may need assistance in understanding the process and procuring the required documentation.
- Review what the clients have provided in a timely manner. If the client takes the time out of their schedule to put together a comprehensive disclosure package, the professional should act on it in a reasonable time frame.
- Discuss the potential need to retain professional advisors for valuations, tax issues, pensions, or complex financial issues. You may want to discuss the method of choosing experts, payment for services, or additional retainer requirements.
- Keep your clients’ documents safely secured. Email and cloud storage sites may not be secure. Your clients are entrusting you with extremely valuable personal information, which should be treated as such.
- Caution should be used when sending electronic communications or emailing documents. Make sure to use a secure platform and server. Anticipate that your email server may be vulnerable to cyber attack.
- Expect to work and communicate electronically with your client while completing financial disclosure. Many clients will find their information easily accessible online and will likely transfer it to you in that format. Be prepared to securely accept their electronic disclosure package, as paper documents are slowly becoming obsolete.
- Assume every domestic contract will be challenged in court. Take copious and contemporaneous notes of the entire financial disclosure process or utilize a platform that allows for recording communications and notes to the client.
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