Filling out a Sworn Financial Affidavit

In Colorado when you are going through a divorce, legal separation or allocation of parental responsibilities case, the Court will require each party to fill out a document called a Sworn Financial Affidavit or Sworn Financial Statement.

What is that?

It's a document that spells out to the Court your income, expenses, assets and debts. It is a snapshot of what your financial circumstances are at the time of the Affidavit.

This is no easy task.

The Affidavit in Colorado is about 10 pages -- more depending on how complicated or numerous your assets and debts are. It is going to ask you how much money you make, what your deductions are, how much you spend on groceries, what your mortgage balance is, what the current value of your IRA is, how much you think your boat is worth. From my experience it can leave parties filling them out with feelings of being overwhelmed with detail and frustration that the Affidavit is invasive. Both are valid. But there is a way to get through it if step-by-step.

Income and Deductions

The first section of the Affidavit is about your income. This can be pretty straight forward if you are a W-4, full-time employee, particularly if you are salaried. However, if you are hourly, if your income varies, if you are self-employed, or if you work on commission, this section can be sticky.

For hourly, full-time employees, as a general rule, it is best to take your hourly rate, multiply it by 40 (works worked in a week), multiply that number by 52 (weeks of the year) and divide it by 12 (months in a year) to get this monthly income.

Example: $23/hour 40 hours/week

23 x 40 = $920/week x 52 weeks/year = $47,840 / 12 months/year = $3,986.67/month

For those whose income varies because you collect tips, work commission or are self-employed, you would take a yearly average over the last three years and divide that by 36 (months in three years).

Example: 2024 annual income $180,000; 2023 annual income $192,000; 2022 annual income $179, 000

180,000 + 192,000 + 179,000 = 551,000 / 36 months = $15,305.56

For the deduction section that follows, the best way to calculate this is to take your year-to-date (YTD) total and divide it by the month that the current paystub is in.

Example: Paystub dated September 30 Federal Income Tax deduction YTD $36,000

36,000 / 9 (months) = $4,000 deducted monthly on average for Federal Income Tax

You'll also notice that this section includes more than just employee or self-employment income. This will also include accounting for income you receive from retirement, disability, and rental income. Be sure to read each line carefully to see if it applies to you.

Expenses

Most folks don't account for every penny that they spend. Instead, they have a monthly statement or a general idea of what they spend on bills and other monthly expenses. While some monthly expenses are the same each month, such as a Netflix subscription or a gym membership, others vary and that can be confusing.

For invoiced expenses such as car insurance, cell phone bills, cable television or childcare, the best practice is to take an average of the monthly total that you pay for each bill.

Example: You have invoices for January ($286.14), February ($288.24), and March ($282.99) for AT&T. Add them all together ($857.37) and divide it by the number of statements you are using (3) for an average (285.79/month).

For expenses that vary greatly such as groceries, field trips, entertainment, etc., it can usually be best to simply think of what that looks like. This sounds vague but the example that I gave clients in the past was to think of what you spend on groceries every week or month. If you go to the grocery store twice per month and spend about $200 every time you go, your monthly expense for groceries can be an average of $400 per month.

Assets

In cases of allocation of parental responsibilities, some assets are not required to be disclosed because they are not "at issue" (i.e. up for debate and distribution) in the case. This will include assets such as real property, automobiles and anything else that is not "income producing." It is important to note that this may or may not include accounts for retirement and investment. Be sure to check with an attorney on what is appropriate for you and in your case. Generally speaking, in Colorado anything that comes to the marriage not by gift or inheritance is considered marital debt, no matter how it is titled.

Generally speaking, you will list every single asset that you have. The form linked above will help guide you but in general it will be real property (houses, land, etc.), automobiles (cars, boats, planes, four wheelers, etc.), bank accounts (traditional, PayPal, Venmo, etc.), life insurance policies, investment accounts (stocks, bonds, bitcoin, etc.), retirement accounts (401k, IRA, 403b, etc.) and any other miscellaneous assets such as guns, rugs, jewelry, tools, etc. For the value, you can give your best estimate, or you can use any other documented current estimated value you may have. One example is that some parties will use a Zillow estimate for a house value if they don't have a recent appraisal. Be certain to check with your counsel if you have one on what the best value to insert for an asset will be. Sometimes the best and most accurate valuation for an asset is "unknown."

Debts

Again, this will not be an applicable section to some folks in allocation of parental responsibilities cases, but for divorce or legal separation you will be required, similar to the assets section, to list any and all debts that you have individually and jointly with the other party. This may include debts such as mortgages, auto loans, credit card balances, 401k loans, student loans, or personal loans. The best practice generally for this section is to use the balance of the most recent statement unless this greatly varies from a current balance (i.e. you recently paid off a credit card and don't have a statement that reflects that).

In general, when you are filling out a Sworn Financial Affidavit, the most important thing is to be thorough and truthful. It is not only your accuracy that is being applied, but also your credibility. It is more important to have a balance or expense that is slightly off due to accounting accuracy, as with the grocery example above, than it is to withhold an entire asset completely. There are Rules, statutes, and case law in Colorado that protect folks who are victims of intentional withholding of financial information. The most important tips I can give are to be thorough, honest, and accurate as you can be.