One of my favorite financial planning teachers told me that “Being Organized is Being in Control”. Little did I know at the time that this is also one of the most important rules to ensuring the best possible outcome from your divorce.
You and your spouse have decided you want a divorce and you’ve hired either a mediator or attorney to help you through the process. So what’s next?
Typically, the first major task that occurs is completing the Financial Affidavit. This document is usually required as part of the divorce process to ensure both parties have a clear understanding of each other’s financial situation.
While this can be a bit overwhelming, it is a very important step that will allow you to get organized so you can be prepared to make the best decisions possible in your divorce.
What is a Financial Affidavit?
A financial affidavit is a legal document that is required in many jurisdictions as part of the divorce process. The purpose of a financial affidavit is to provide a clear and accurate picture of each spouse’s financial situation, including income, expenses, assets, and debts. This information is then used to help determine spousal support and division of property.
What Information Should be Included in a Financial Affidavit?
A financial affidavit should include detailed information about a person’s financial life. Specifically, it should include:
- Income: This includes all sources of income, such as salary, wages, bonuses, commissions, and any other sources of income. It’s important to include both gross and net income.
- Expenses: This includes all monthly expenses, such as rent or mortgage payments, utilities, food, clothing, transportation, and any other recurring expenses.
- Assets: This includes all assets owned by the party, such as bank accounts, retirement accounts, real estate, investments, personal property, and any other assets of value.
- Debts: This includes all debts owed by the party, such as credit card balances, loans, mortgages, and any other liabilities.
Gathering Financial Information
The first step in preparing a financial affidavit is gathering all of the necessary financial information. This can include documents like bank statements, tax returns, credit card statements, and any other relevant financial documents. Most courts typically require a two-year time frame, so make sure you have all the documents for at least the past two years.
It is also important to have accurate and up-to-date information as this will form the basis of your financial affidavit. If you’re missing any financial documents, you should try to obtain them in a timely manner. This can include reaching out to banks, credit card companies, or any other institutions that hold your financial information.
Be Thorough and Honest
It’s crucial to be thorough and honest when filling out your financial affidavit. This is a legal document, and any inaccuracies or misrepresentations can have serious legal consequences. While it may be tempting to hide assets or downplay your income, doing so can have severe consequences.
Complete the Form
Once you have gathered all the necessary financial information, it’s time to start filling out the financial affidavit form. You can usually find a financial affidavit form online or through your attorney. Make sure to use the most up-to-date version of the form and fill it out accurately and completely.
While completing the form, make sure to double-check the information you’re providing. It’s important to ensure that the form is easy to read and understand. This will help ensure that the court and your attorney can quickly understand your financial situation.
Seek Help If Needed
If you’re struggling to complete your financial affidavit, don’t hesitate to seek help from an attorney, your accountant, or a Certified Financial Divorce Analyst. They can provide guidance and ensure that you’re filling out the affidavit correctly. An attorney can also review the completed financial affidavit and ensure that there are no mistakes or omissions that could lead to legal issues later.
Common Questions about the Financial Affidavit
Here are a few questions that we often receive about the Financial Affidavit.
- What if I don’t have all the information I need?
In most marriages, one spouse is usually more involved in the finances which means that one spouse may not have access to all the information.
I suggest you start by ensuring you have a copy of the tax return. If an accountant was involved with filing your taxes, they will be able to provide you with a copy. The tax return will give you an idea of all the assets that were owned by you or your spouse. From here, you can call the various financial institutions and request a copy of statements.
If all of this fails, your attorney will be able to subpoena these statements so you will have access to the full information about the assets that are owned by you and/or your spouse.
- What If I’m Unsure About How to Include a Certain Asset or Liability?
If you’re unsure about how to include a certain asset or liability, it’s best to consult with an attorney. They can provide guidance and make sure these items area appropriately accounted for on the document. As mentioned above, it is crucial to be thorough and honest when filling out your financial affidavit.
- What Happens if I Don’t Complete My Financial Affidavit?
If you fail to complete your financial affidavit, it can have serious consequences. For example, the court may not be able to make accurate determinations about things like spousal support or division of property. Additionally, failing to complete your financial affidavit can lead to legal issues down the line.
Next Steps
Once you’ve completed your financial affidavit, it will be reviewed by your attorney and possibly the court. If there are any errors or omissions, they will need to be corrected before the document is finalized. Once your financial affidavit is complete, it will be used as a basis for determining things like spousal support and division of property.
Be prepared, because the financial affidavit may need to be updated a few times during a divorce.
Completing a financial affidavit for a divorce can be a complex process, but remember what my professor said, “Being Organized is Being in Control”. When you have a good understanding of your financial affidavit, you are in a better position to be empowered to receive the best possible outcome in your divorce.
And it’s an important step to ensure that both parties have a clear understanding of each other’s financial situation. By following these tips, you can fill out your financial affidavit accurately and completely and ensure that the divorce process proceeds as smoothly as possible.
Opinions expressed are those of the author and are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
