A divorce is not just the ending of a marriage, but it is also the legal separation of everything that they jointly own. If the divorcing couple can agree on how to divide their financial assets, debts, and property, then the judge can sign off on the agreement without legal disputes.
However, if the couple cannot agree, each spouse will have to disclose their financial assets and liabilities for the judge to reach an equitable distribution. To do this, you will most likely have to detail your finances in a "financial affidavit."
A financial statement in a divorce is like a worksheet. A financial affidavit may ask about the financial status of each spouse separately, and what the couple owns jointly. Mandatory disclosure forms can include information about:
In addition to listing income and debts, spouses generally have to provide supporting financial documents, including credit card statements, bank statements, retirement plan statements, income tax returns, real estate documents, loan documents, and debt statements. Your divorce attorney or your accountant can help you gather the proper documentation to complete the initial disclosures.
Income includes any money that you make, individually and as a couple. Most people only consider their wages and salary as their income. However, income can come from many financial sources, including:
Expenses in a divorce disclosure statement can include any money or payments going out, including shared monthly expenses, marital expenses, and individual living expenses, which may include:
The largest assets are generally houses, vacation homes, or other real property. Assets also include financial accounts, including bank accounts, investment accounts, life insurance policies, retirement benefits, and business interests. Other assets may include vehicles, boats, artwork, jewelry, or antiques.
Just as couples have to divide assets, they may have to divide debts and financial liabilities when divorcing. Financial difficulties are a common reason why couples indicate they are getting a divorce. Some common examples of shared debts include:
In a contentious divorce, a spouse may not want to tell their soon-to-be-ex about all their assets. However, failing to disclose assets or making misrepresentations in a financial affidavit is problematic. If the divorce court judge finds out about misrepresentation or fraud, the judge may be more likely to increase the award to the other spouse. A judge could also find the lying spouse in contempt of court. That could mean going to jail.
Both parties are required to file the entire form, and it becomes part of the official family law court record. Talk to your divorce lawyer about the financial disclosures of your spouse and ask any questions you have if you suspect your spouse is not being truthful or you suspect that there are possible hidden assets. During the divorce process, your lawyer can request a formal discovery process to get access to business records, financial account statements, or additional documents that may indicate whether your spouse is not disclosing everything in the financial affidavit.
When it comes to financial matters in a divorce, even if you and your spouse agree on everything, it is wise to talk through your options with an attorney and have them evaluate your divorce settlement. You may not realize it, but an attorney may be able to spot hidden assets or help you see that the property division you are agreeing to is not fair to you.