When divorce proceedings begin, each spouse is required to fill out a financial affidavit. This form, which becomes part of the court record, shows income from all sources, debt (or liabilities), living expenses, and assets. Each party swears (under the pains and penalties of perjury) that the information contained on his or her affidavit is true. Judges use the information from the affidavit when they issue temporary orders on separate maintenance (temporary alimony), child support, and other financial matters during separation. The affidavit is very useful to attorneys, as it becomes the basis for seeking temporary support and assists the attorney later during the discovery and property settlement phases of divorce.
What if you underreport income or exaggerate expenses?
Because you sign the financial affidavit under oath, deliberately falsifying your financial information is perjury. Additionally, if your divorce ends up in trial, your credibility as a witness would be undermined if your spouse’s attorney can prove that you lied in your affidavit. This, of course, may sway the court’s sympathy toward your spouse. And finally, even if your case never makes it to trial, your spouse may be able to force a property settlement in his or her favor if you gave false information in a court document.
An example: John handled the finances in his family and secretly stashed away $50,000 in a bank account during the last years of his marriage. When divorce proceedings began, he wire-transferred the money to his mother, a resident of Colombia. John’s wife Mary learned of the money when she found a receipt for the wire transfer in a coat pocket. Since John had not disclosed the existence of this money in the discovery phase or in his financial affidavit submitted to the court, Mary was able to use this fraudulent transfer to force a more favorable settlement.
It’s not uncommon for spouses to be less than truthful when completing their financial statements. If you suspect that your spouse has not disclosed some assets, there are a number of places where you or your attorney can look for these hidden assets. These documents are important:
- Personal income tax returns
- Partnership and corporate tax returns
- Pay stubs
- Savings account statements
- Canceled checks, check registers, and bank statements
- Securities and mutual fund statements
- Children’s bank accounts
- Life insurance contracts
However, it’s often the case with married couples that one spouse handles the bills and other financial affairs. So the other spouse may not be well informed. Therefore, it may be difficult for one to determine if the other is being truthful in the affidavit. Fortunately, you and your attorney have opportunities for fact-finding, including hiring a forensic accountant.
Common mistakes on financial affidavits
Sometimes hidden assets aren’t the problem. Frequently, people unintentionally get their expenses wrong because they don’t know how to fill out the affidavit. Some expenses are easy to list – you know your car payments, mortgage payments, and utility payments. But there can be double-counting if your bank pays your property taxes, for example. Other, often smaller, expenses are easy to overlook — how much you pay for pet care, subscriptions, lawn care, school supplies, and other one-off or annual expenses. Because these types of costs can really add up, really think about them when completing your financial affidavit. But don’t overestimate your expenses, because you may have to defend them.
What information is in an affidavit?
The data in a proper financial affidavit includes:
- Your name and address
- Occupation and job title
- Employer’s name and address
- Frequency of your paychecks (i.e., weekly, biweekly, monthly, etc.)
- Monthly gross pay
- Type and amount of payroll deductions
- Net monthly take-home pay
- Other sources (and amounts) of income
- Net monthly income from other sources
- Housing expenses
- Utility expenses (gas, electric, telephone, water and sewer, trash)
- Grocery bill
- Restaurant and entertaining expenses
- Out-of-pocket medical expenses (doctor, dentist, prescriptions)
- Insurance expenses (life, health, disability, auto, homeowner’s)
- Transportation expenses (fuel, repair and maintenance, parking)
- Clothing expenses
- Child-care and child-related expenses
- Personal care and toiletries
- Educational expenses
- Miscellaneous expenses
- Debts of all kinds, including car loans, mortgages, 401(k) loans, student loans, etc. (monthly payment, unpaid balance)
Because divorce is based on state law rather than federal law, each state has its own requirements regarding the financial statement. Nevertheless, the above-listed information is typical. Contact a divorce attorney for more details about your own situation.