Understanding Your Financial Affidavit

Financial affidavits paint a complete picture of what your financial situation is at the time of signing. Also called financial statements, net worth statements, financial disclosure affidavits and statements of financial affairs, financial affidavits are important documents in divorces, child support cases and bankruptcies, as well as other court cases. They're also used to apply for a loan or to determine whether to invest in a company. Financial affidavits are at the heart of many court cases and business transactions, which is why gaining a better understanding of them can be crucial both for your personal and professional life.

What is a financial affidavit?

A financial affidavit, which has different names in each state, is a statement showing your income, expenses, debts, and assets. It allows a court to figure out how much spousal support and child support it should award. It also allows a business to decide whether to grant a loan, and it shows whether a company is healthy for people to invest in it.

In a divorce, each spouse prepares a financial affidavit, which could take many hours to do. The financial affidavit requires you to get your tax returns, checkbooks, bank statements, pay stubs, and bills so you can accurately list them on the form. Some financial disclosure affidavits require you to figure out weekly or monthly amounts of income and expenses. That's when doing the math takes time, as you must calculate your salary and income from all sources, making sure your calculations are accurate. If you're having difficulty preparing an affidavit or statement, you can hire an accountant, a forensic accountant, or a divorce attorney to prepare it for you.

Some forms are easier to fill out than others, as there are long-form affidavits and short-form affidavits, and which one you'll use will depend on your state and what you need it for. Regardless of which form you use, you must tell the truth in the financial affidavit because you are swearing to its veracity, and penalties of perjury apply if you lie on the form. If a judge catches you leaving out important information or inflating expenses—and they will find out—or if you're hiding assets, you could pay fines or get jail time. You may also get penalized when paying or receiving child and spousal support.

How financial affidavits are used in court

A court uses financial affidavits to calculate child and spousal support. You'll exchange your financial affidavit with your spouse in a divorce or child support case. If you notice some glaring inconsistencies or outright lies, bring them to the court's attention. There are instances where someone is hiding assets in an offshore account or where they're underemployed, which is working less than they could be so they don't have to pay much support.

Your attorney will be looking for these mistakes or omissions, and the difficulty lies in finding them. Once you do, you'll have to prove whether they were intentionally made instead of innocent mistakes.

Contents of financial affidavits

Financial information in a statement also shows whether property is marital, and thus subject to division by spouses, or separate, which belongs to the spouse who brought it into the marriage. This information is also a way for the court to see if either spouse received an inheritance, a large gift, or a money settlement from a lawsuit, all of which the financial affidavit must include.

The court will assign financial responsibility based on the contents of the financial affidavit. You can conduct discovery to find out if your spouse can support their statement and that it's based on fact, not fiction.

To properly fill out your financial affidavit or statement, include the following;

• Docket number and name of the case, including names of both parties
• Your income from all sources, including overtime, bonuses, social security, tips, interest, other spousal support, and commissions
• Expenses, including home expenses, even if both spouses are responsible
• Any inheritances, gifts, or money damages received as a result of a court case
• What deductions you take on your taxes
• Children's names, ages, and their expenses
• Extraordinary expenses, such as tutoring, cost of transporting a child to an out-of-district school, and the cost of the school itself
• Health care costs, including out-of-pocket costs
• Other insurance costs
• Payments to maintain your professional license
• Debts you pay and whether they're in your name or in both spouses' names, including credit cards, student loans, and the IRS
• Assets, such as homes, cars, boats, stocks, retirement plans, antiques, or other collections

The financial affidavit may require attachment of W-2 and 1099 forms, along with tax returns and pay stubs. Don't inflate your expenses or minimize your income. Also, don't sign the affidavit until you take the papers to a notary public.

If you prepare your financial affidavit carefully and are forthcoming about your income and debts, you could help settle your own case so you don't have to go to trial. If there's a lot of missing or questionable information, you'll be doing discovery for a long time, which isn't fun for anyone. A well-prepared financial affidavit, however, will help move your case along, something that all judges appreciate.