What Role does a Sworn Financial Statement Play in a Family Law Case?

In every divorce, legal separation and allocation of parental responsibilities matter each party will be required to complete financial disclosures to one another.

Financial disclosures are a crucial part of most family law cases. There are two parts to financial disclosures. One part is the supporting documents themselves (bank statements, paystubs, 401k statements, etc.). The latter is memorialized into a document called a Certificate of Compliance. This document simply lists out what was disclosed to the other side. The documents required to be disclosed in Colorado are listed in Form 35.1.

The other crucial piece is a Sworn Financial Statement. This document is just as it sounds. It is a Sworn Statement because the party filling out and filing the document must swear under penalty of perjury that the contents of the document are accurate to the best of their knowledge. The document itself pertains to the financial situation of each party individually. This document can also be referred to as a Financial Affidavit.

There are four main parts to a Sworn Financial Statement: Income, Expenses, Debts and Assets.

Income is a pivotal part of the Affidavit. This will include not only salaried and hourly income for W-2 employees but may also include income from other sources. For example, rental income; income from interests on accounts; or retirement and disability income. If you are self-employed, this area can be extra tricky. It has been my experience that most attorneys and/or Courts will use an average of the last three years of a self-employed party's income to come up with an average monthly amount.

This piece is extremely important and should be calculated and memorialized with precision. If you have the ability to have an attorney review or draft one for you, you should take advantage of that.

Your income will assist greatly in determining your support obligation, if any. It is a party's gross (not net) monthly income that is used in calculations for child support and maintenance.

The expenses portion of the Affidavit is often tricky for folks. Largely this is because some monthly expenses vary or are unknown. For example, the form will ask you how much you spend each month on things like entertainment (going to the museum, going to the movies, going to the zoo, etc.), groceries, utilities (electric, water, gas, etc.) and children's expenses (clothing, lunches, field trips, etc.).

The expenses portion of the document can be confusing and frustrating. The important thing to know here is that your expense section does not need to contain exact amounts. Instead, an estimate is just fine. The Court will not require a party to pull up their receipts for the last year and find an accurate total on what you spent on fast food last year. Instead, most folks rely on a simple estimation. For example, when I go to the grocery store, I spend about $200 and I go twice per month. As such, my grocery expense would be $400 per month roughly.

The form will make you think of expenses that you normally don't. This can be daunting. Going line-by-line to figure out what you spend on gas for your car and clothes for your kiddos seems pretty irrelevant.

But as with anything, there is a reason for it. The Court may look at the expenses of the parties when making determinations about things like maintenance. This section may give them a clearer picture for child support as well. Usually, this calculation is cut and dry, but there can be variations when it comes to extraordinary expenses paid by each party.

The debt section will include any and all debts that each party has. This may be joint or individual debts. It will include credit cards, student loans and personal debts. This section will not include debts that have collateral attached such as car loans or mortgages. Here both attorneys and the Court (if necessary) can review the whole of the debt in the marriage for division between the parties.

Similarly, the asset sections (real property, automobiles, bank accounts, life insurance, retirement accounts, investment accounts and miscellaneous) will include all assets for the party. This will be joint and individual assets. Even if you don't believe that an asset is a marital asset, you must list it. There are ways to clarify your position on the asset, but everything needs to be listed. This is not just big-ticket items like the house and the cars. It will also include smaller assets such as jewelry, firearms, tools, etc.

If your case goes to trial, a Court will use the Sworn Financial Statement with heavy reliance. This document is meant to be a snapshot of your current (not anticipated or past) financial situation. It is designed as a "one stop shop" for all that is important in your family law case. These are amended and updated frequently during the pendency of a family law matter, but each version is just as important as the initial one.

Again, I cannot stress enough that you should utilize an attorney to help guide you through this process. A whoopsie on a Financial Affidavit could cost you big!