A financial affidavit is a comprehensive document that both spouses are usually required to complete during a divorce. The financial affidavit paints a picture of your family's financial history and current financial situation. This document becomes very important during a divorce when the judge is determining issues such as alimony and child support. Financial affidavits can be time-consuming to complete, but it is very important to complete them as accurately and honestly as possible because they will be used at all stages of your divorce.
Varying State Laws
Divorces are controlled by state laws and therefore the process for completing a financial affidavit will vary depending on where you live. A financial affidavit goes by different names in different states. In New Jersey, it is called a Case Information Statement. In New York, it is called a Statement of Net Worth and in Utah, it is called a Financial Declaration. Whatever the name, most financial affidavits require similar information. Each state requires both spouses to submit a financial affidavit to the court early in the divorce case. Most states also require the parties to exchange financial affidavits with one another. This promotes transparency and allows each party to see what the other is claiming about the family finances.
Information on Financial Affidavits
Financial affidavits require you to fully disclose your income from all sources. This includes income from your full-time job as well as any part-time or side jobs. You must also list income from Social Security or disability and income from pensions or annuity funds. You will also be required to list all of your financial accounts, including checking and savings accounts, Individual Retirement Accounts (IRAs), money market accounts and stock accounts. In addition to your assets, you must list all of your debts, including credit card debts, car loans, student loans and mortgages. The final part of a financial affidavit is your monthly budget where you explain to the court how much money you spend on various things each month, such as food, clothing, entertainment and gas.
If you have children, you will be required to disclose information about them on your financial affidavit, including background information such as their names and dates of birth. If a child has special needs or extraordinary expenses, you will need to disclose this as well. Some financial affidavits also require you to list your children's bank accounts and separate property. Overall, any information regarding your children's own finances or money you spend on them must be included on a financial affidavit.
Uses of Financial Affidavits
Divorce courts require both spouses to complete financial affidavits because there are many issues in divorce that involve both spouses' income, assets and debts. Therefore, the court needs to have a complete and accurate snapshot of your family's financial situation before deciding this issues. A financial affidavit is very important when the court determines alimony, for instance. This is because a financial affidavit includes a section on each spouse's income and monthly living expenses. By analyzing the spouses' incomes and expenses, the court is better able to determine what amount of alimony is appropriate. The same is sometimes true for child support as well. Financial affidavits are also used by courts to determine what assets, if any, are subject to division during divorce. The court will also use financial affidavits to determine which spouse will be responsible for which debts following the divorce.
Importance of Truthfulness
It is extremely important that you be completely honest and accurate when completing your financial affidavit. First, most financial affidavits are considered your sworn testimony and you must sign them under oath. This means that if the court learns that you were dishonest on the affidavit, it is considered perjury and you could face penalties and sanctions. Also, if you are dishonest on your financial affidavit and your spouse must take other measures to uncover the truth about your income, assets or debts, you may be required to pay the counsel fees she incurred in doing extra investigative work. Finally, if you are not honest in your financial affidavit, the court may make an erroneous alimony or child support order that is subject to modification in the future.
Tips for Completing a Financial Affidavit
Financial affidavits can be difficult and time-consuming to complete, especially the sections regarding your monthly expenses. Although some monthly expenses are constant, such as your mortgage, others such as your utility bills will fluctuate each month. In order to estimate your expenses, it is best to review your bank account and credit card statement for the past year and add up how much you spend in a year on each expense. You then divide that number by 12 to get the average monthly amount. Also, if you have assets like a house or car, it is best to get a formal appraisal of them because you will need to list their approximate values. If you find the process too challenging, you can seek assistance from your accountant or an attorney. Both of these professionals will be able to assist you in completing a financial affidavit as accurately as possible.
Read More: How to Prepare a Financial Affidavit for Child Support
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