How to prepare a financial statement for your divorce

Going through a divorce is an emotional, traumatic and even expensive situation. One of the most important parts of the process is each party's financial statement, which is required in all contested and some uncontested divorces.

Your financial statement, or affidavit, is a formal document that goes into your financial details, including income, expenses, assets and debts. Both spouses must fill out this statement and share it with the courts, and with each other. The purpose of this is to give the courts a clear understanding of a divorcing couple's financial situation.

It sounds like a straightforward and even simple process — income, assets, debts — but in reality it is a complicated endeavor. Making it more complicated is the fact that your financial statement is an absolutely vital part of your divorce that helps to determine your divorce settlement agreement. The court will use your financial statement to rule on alimony, division of property, child support and other financial considerations.

In other words, your financial past during your marriage will determine your financial future as a single person. So, it's vital to get it right. In many marriages, however, one spouse or the other handles the finances. When you're divorcing, if you haven't had your finger on the pulse of your finances, you might feel overwhelmed by the idea of delving into assets, stocks, 401(k)s, Social Security, debts. In many cases, people estimate. But it's vital to be as accurate as possible.

Some of the things you'll need to list on your financial statement:

Even if much of the information is joint, such as joint tax returns, each spouse needs to file this documentation. If you don't, or if you attempt to hide assets or not disclose them, you will be liable for damages and penalties later.

Other things to consider:

Your financial statement lays the groundwork for determining your financial future, so it's vital for you and your spouse to get it right. Using a financial planner who is experienced in handling financial statements in a divorce is critical. At Harbor West, we can help you create a solid financial statement that will be the foundation for your future financial well-being.

Disclaimer:

This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances.