Going through a divorce, even an amicable one, can leave you feeling as though your life has been turned inside-out. It’s not easy when documents containing details which were once private start crossing the desks of lawyers and judges, people who are most likely strangers to you. Complicating matters even more, these same lawyers and judges have considerable power over your future, and that’s why --especially where your finances are concerned --it is absolutely critical to provide them with information that’s as accurate and detailed as possible.
If your divorce is contested, and possibly even if it’s not, the Courts will require you and your husband each to file what’s generally called a “Financial Affidavit.” This official document is the formal presentation of a couple’s current financial situation. It lists in detail what you own and what you owe (assets and liabilities), and what you earn and what you spend (income and expenses). Both spouses are required to swear, under penalty of perjury, that the information they provide in a Financial Affidavit is true.
That may all seem straightforward enough at first. But, many women soon find that completing a Financial Affidavit involves much more than paging through a checkbook registry or scanning through last month’s credit card statement. Properly preparing a divorce Financial Affidavit can be anything but simple, and for many, knowing how important it is for temporary alimony, temporary child support and the final divorce settlement agreement makes the task all the more intimidating.
Let me help by offering a few key points you need to know before you get started.
When preparing your Financial Affidavit, make certain you:
· Understand the Financial Affidavit regulations that apply in your state. You may already know that regulations governing the division of separate and marital property and the division of debt are different from one state to another. Likewise, regulations concerning Financial Affidavits can vary depending on where you live. First of all, Financial Affidavits are called different things in different states. If you live in Connecticut, you will file a “Financial Affidavit,” but in Utah, you’d be asked for a “Financial Declaration.” Couples divorcing in New Jersey are required to file a “Case Information Statement,” while the Courts in New York use a 14-page “Statement of Net Worth” form.
Bottom line: Be sure you know what information your state’s Courts require of you, and that you have the correct forms in hand to provide it.
· Pay attention to every detail. Whatever name they go by in your state, all Financial Affidavit forms ask for very specific information. You will be required to itemize your every expense according to category –from the obvious ones such as mortgages, cars and school tuitions, to things you might not immediately think of, such as hair care, pet sitting and magazine subscriptions. Remember: The “little” expenses can add up significantly, and errors or omissions could affect the financial outcome of your divorce agreement.
Sorting through months of credit card and bank statements, utility bills, insurance records and the like to ferret out all the particulars you need for your Financial Affidavit can seem daunting (and tedious!), but it is necessary. Familiarity with your financial situation at that level of detail can make a significant difference in the picture your Financial Affidavit will present to the Courts . . . and so, no matter how difficult the process becomes, please resist the urge to guesstimate a response! Most people who guess at their financial information end up way off the mark, and ultimately, that can do more harm than good.
Here’s my advice: If you’re feeling overwhelmed by the task of completing your Financial Affidavit, consult with a divorce financial planner, who will complete a Lifestyle Analysis and the Financial Affidavit on your behalf. (A Lifestyle Analysis identifies the spending habits of a couple along with the day-to-day living expenses incurred during their marriage, with an emphasis on the last three to five years. It includes recurring and ordinary expenses, as well as non-recurring and unusual ones. It’s often required by the judge, and serves as a verification of the net worth and income and expense statements submitted by both spouses.)
· Realize your attorney will only review your Financial Affidavit for glaring mistakes. Although your divorce attorneys will provide you with the proper forms and basic guidance, don’t expect them to use a fine-tooth comb to go through the numbers you submit. At best, most divorce attorneys will check for only the most obvious errors, and quite honestly, they really don’t have the time or inclination to verify your canceled checks or sort through several years of credit card statements to categorize each and every charge.
Of course, extreme inconsistencies will stand out. If you show your monthly telephone expense to be $10,000, or report that you spend 90% of your monthly income on clothing, they’re likely to question you about it. But if, for example, you state on your Financial Affidavit that you spend $10,000/month on clothes, and this does not represent a widely disproportionate percentage of your income or expenses, your attorney will assume that it’s true, even if you meant to say $1,000. Similarly, you can’t expect your attorney to know if you’ve forgotten to list any but the most obvious expense items.
· Realize you’re under oath . . . and so is he. A divorce Financial Affidavit is executed under oath, often before a Notary Public. You must swear that the information you provide in it is true and correct to the best of your knowledge and belief. Your husband will have to do the same when he files his. This means that the bonus he got last year, or the ski trip he charged to your jointly-held credit card, can’t “accidentally” slip his mind (although this does happen frequently and will be the subject of a future article.)
Interestingly, while completing a Financial Affidavit and/or Lifestyle Analysis, some women discover that their husbands are hiding assets. (Actually, this turns out to be the case much more often than most women realize.) Be assured that anyone who deliberately provides false information on a Financial Affidavit is committing perjury, and therefore can be held in contempt of court and face additional sanctions, including possible criminal charges.
One caveat here: A Financial Affidavit can be revised. If your financial circumstances change, you can, and you should, update your Financial Affidavit, even after it has been filed with the Courts.
· Get help, if you need it. Unfortunately, the painstaking task of completing a divorce Financial Affidavit, as important as it is, also falls to you just as you may be feeling least able to cope with this sort of task. While feeling overwhelmed is understandable, please don’t let your emotions detract from the careful, meticulous attention this critical part of the divorce process requires. Get help with preparing this document, if you need to. The information you provide the Courts will be used to determine the division of your assets, alimony and even child support. In short, it lays the foundation for your future financial well-being. Don’t shortchange it.
As I tell all my clients, above all else, while preparing your Financial Affidavit, remind yourself to Think Financially, Not Emotionally®. Well into your future, you’ll be glad you did.
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com) a firm that exclusively advises affluent women throughout the United States before, during and after divorce. He assists women and their divorce attorneys with deciding on the most advantageous way to divide marital assets and enable them to negotiate more favorable settlements, especially when there are complicated financial and tax issues. Jeff also advises happily married women who have seen their friends blindsided by a divorce initiated by their husbands and wonder (wisely) how financially vulnerable they’d be in that situation. Jeff developed the nation’s first Just in Case(TM): Secure Your Financial Future,a one-hour program, which quickly shows married women how to be prepared in the event of a future divorce with immediate, practical steps. He can be reached at Landers@BedrockDivorce.com.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.
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