Simple Tools: The Financial Affidavit

Why, When and How to use your Finanical Affidavit.

The most important tool in your divorce is frequently the most over-looked, and avoided. Even its name is off-putting; but it is the key to understanding all of the other issues which arise. It is called (drumroll, please), “The Financial Affidavit” (yawn).

Frankly, most people should keep a current finanical affidavit available whether or not they are contemplating divorce. A financial affidavit is just a form that shows you how much you have in income, expenses, liabilities and assets. While these may sound like no-brainer questions, most people cannot accuratelty answer these questions off the top of their heads. Sometimes one member of a family knows all the answers and the other just relies on that person. Sometimes neither party can answer them. Rarely, but sometimes, both parties are very aware of all of the finances.

It is surprisingto me how often a client – or an opposing party – resists using the simple form available on the Judicial Branch websites of most states. It can be a little complicated the first time you look at it (for example, in Connecticut, you have to divide every monthly amount by 4.3 weeks). But the value of this tool far outweighs its inconvenience.

Here is a link to the CT “Long Form” to give you a sense of the questions it poses. https://jud.ct.gov/webforms/forms/FM006-LONG.pdf

WHY: Look, I hate to be the one to tell you, but divorces frequently come down to a set of financial decisions. After the child-rearing and emotional issues have been resolved, it is similar to a business transaction. People want to know: How much child support will I have to pay or receive? How much alimony? What portion of the debts and assets will be assigned to me? The answer to these basic and all-important questions is not a secret magical formula. It is a direct function of the information contained in your own personal finanical picture.

Simply put, better informed is better prepared. Building your own financial affidavit will likely compel you to ask questions and make some calculations that you never thought to ask. Questions like how much money do we spend on restaurants each week? How much equity is in our house right now? Do we have retirment accounts, and how much are they worth? Not only is this good information for the court. It is good information for you. If you are trying to imagine what a post-divorce future will look like, knowing your finanical picture can help define those scenarios. Picture knowing how much money you would have if you sold your house; how much disposable income you have right now; and what you are paying for health insurance each month. These are the questions people pay attorneys and financial consultants to help them figure out. And, ironicaly, you are the only one who can get them the information which unlocks these secrets!

WHEN: Early and often. If you bring a completed financial affidavit with you to your first meeting with your divorce attorney or mediator, you will save yourself time and money getting to the heart of what the case will entail. In most jurisdictions you will need to disclose the information within the first few weeks of any divorce action, and so will your spouse. So, why wait? Get the information to your attorney as soon as you can. The earlier your lawyer or mediator is informed about your case, the more accurate they can be in looking for an appropriate resolution.

FAQ: Why should I divulge my information to my spouse? Aren’t we going to be fighting about this? Shouldn’t I keep it a secret?

Answer: The court will compel you to share all information, anyway. Any knowledge which is not exchanged voluntarily is likely to come out on the witness stand – either in depostion or at trial – anyway. But, of course, voluntarily costs less time and money.

HOW: Despite the mysterious-sounding 4.3 weeks rule and all of the detail (weekly grooming costs!?), these forms are straightforward once you understand them. And, as with so many things, the internet has made the work easier than ever. Start by finding your most recent paystubs, tax returns, mortgage loan statement, and credit/debit card statements (these can be downloaded from your banking institution). These 4 sets of documents will provide you 80% of your necessary information. When you are ready to get started, set aside one hour of time. Supply yourself with one scratch copy of the form to work on and a blank copy to fill-in later, a sharpened pencil & eraser, a calculator, a note pad for jotting questions or doing calculations, and a tall glass of your favorite beverage. Preferably non-alcoholic, to cut down on mistakes. Then, start filling in the blanks. Any questions you still can’t answer, just make a note and move on.

Pro tip: On your first time through the form, use the figures as you find them. If your mortgage is a monthly amount; write it that way. If you spent a total of $5,000 on vacations last year; write it that way. Get your figures all in one place; convert it to weekly later.

Once your first draft is complete you have a choice – you can stop there and give the draft and your supporting documentation to a professional to complete for you. You have already saved yourself hours of professional fees by making a solid first draft. Or, you can go for it and convert the figures to weekly on your own. It is not so hard. Any monthly amount gets divided by 4.3. Any annual amount gets divided by 52. So, if you spent $5000 on vacations last year, you would put $96 as your weekly vacation budget. If your monthly mortgage loan payment is $2000, that’s $465 per week.

And now – here’s the icing on the cake… you have created your own financial snap shot! If you are not getting a divorce, you have a realistic budget to use when you plan for future events. If you are going through a divorce you now know what each of you should have when the smoke clears. Even if its not much, at least you know what it is!

What We Love: Divorce is an opportunity for growth. Taking charge of your life begins with understanding your finances and leads to your own empowerment.

My YouTube Debut

I want to introduce you to a great divorce video series and website called “Single Process, the process of going from a we to a me.”

https://www.singleprocess.me/

Barbara Hazelton and Jo Briggs are empowering women through their own investigation into all of the questions surrounding divorce: legal, finanical, personal, parenting, dating, and many more.

They do their homework, interview experts, and help people navigate their way through what can be a daunting process.

My episode just aired and it is about preparing for your divorce before you even meet your lawyer.

https://www.singleprocess.me/prep

Don’t just watch me, though. See what topics apply to you and watch as much as you need. I am proud to be a small part of this important work.

 

10 Reasons to be Grateful you are Divorced this Holiday Season

While we look around at all of the people rushing to spend this holiday with loved ones, those families who are in transition – going through divorces or separations right now, or living with the decisions to do or not to do either of those things – might feel a little less grateful for their particular lot in life this week.  No need!  Divorce is an important time to count your blessings.

Here are 10 reasons to be grateful if you are divorced or separated this Thanksgiving:

  1. You never have to eat your mother-in-law’s greasy mashed potatoes again.
  2. If this is the year you do not have the kids, you have a day to yourself to finally watch the entire series of Breaking Bad in your bathrobe.
  3. If this is the year you do have the kids, you can start making unconventional choices for the menu – rainbow marshmallows on the sweet potatoes, anyone?
  4. No one insinuating you look fat by asking, “Is that what you are going to wear?”
  5. No more worrying that your spouse is going to get drunk and embarrass you in front of your parents.
  6. No more worrying that if you get drunk and say what is on your mind you’ll hear about how it affected your in-laws.
  7. Whether it is true in India or not, in America we do not light our daughters-in-law on fire when they ask for a divorce.
  8. Whether it is true in Iran or not, in America being divorced does not automatically mean you are also homeless, bankrupt, and un-marriageable.
  9. Even if you just moved into the smallest apartment in town, you have a roof over your head; and you get to choose who does and does not walk in the front door.
  10. If the whole idea of being divorced during Thanksgiving just turns your stomach – maybe you’ll lose a few pounds and be in “market-ready” condition at all the coming holiday parties! It is never too early to shop for a New Years’ outfit.

If you are not yet divorced or separated, but know in your heart-of-hearts that you need to get out of this relationship, use this holiday season as your internal farewell tour.  Catalogue what you do not like, be it the menu, the guests, the smells, the  pressure to buy expensive gifts, the complete disregard for the expensive gifts you bought, or anything else, and remind yourself – I will never have to do *this* again.

If you are healthy and safe and making choices for your own life, then you are more fortunate than 90% of the people who live on this planet today.  Take a moment to stop and count your blessings. . . Then, please pass the greasy mashed potatoes.

What We Love:  I have never actually tried rainbow marshmallows; but I do love the idea of them.

A Hidden Treasure Chest

I represent a wife whose husband is in business with his brother. The wife believes that there is a lot of cash exchanged in the husband’s business. Even if she is correct that there is a substantial amount of cash exchanged in the husband’s business, there is still not a lot of money in that family. She does not have access to enough money to hire forensic accountants, private investigators and litigating attorneys to delve into these sorts of questions.

It is not so simple when money is tight. She wants to know how she can find out for herself whether he has cash hidden away or if there really is, as he claims, no cash. Or – even if there is not a stock pile of cash right now; is it possible that he can get paid off the books and avoid his financial obligations going forward?

I asked her to consider her husband’s purchases and lifestyle, and get a picture in her head of how much cash she thinks exists and is not being recorded.  My suggested equation to her is if she believes that going through the discovery process will net her more than the cost of the professionals involved.  She does not think so.

Here are some ideas for how to find money on your own, or with the help of a mediator.  The basic process is known as “Discovery” and every state has a set of laws which direct divorcing parties to show each other and the court pertinent requested documents.  Your mediator can help you request the documents.  But remember – whatever questions you ask, you should be prepared to answer, as well!  If you ask for bank account statements; be prepared to show all of your own bank account statements.

A stripped-down version of what a forensic accountant might do is to first request all of the records showing the jobs done by the business for the past year – calendars, receipts, invoices, work orders, materials ordered, etc.  on one hand, and the bank records showing income on the other.  Using this information, you would be able to draw a rough idea of how many jobs the company performed, when and where the jobs were done, and the approximate value of these jobs.

If, for example, the company averages 4 jobs per month at $5000 per job and you track that through the business records and income, but some months show the same number of purchases, the same timing of sub-contractors hired, and dispersed, but only 3 jobs’ worth of income, you could deduce that the fourth job was paid in cash, and pocketed.  A pattern of this sort of discrepancy would be of interest to a judge and could alter the financial awards in the matter.

In another matter I handled, the husband showed income of $50,000 per year on his tax returns, but when we looked at copies of his annual credit card and debit card statements, he was spending closer to $100,000 per year – without going into additional debt.

So, we have covered one question:  will a treasure hunt cost more than the amount of treasure you find?

The other question to consider is whether hiding assets is worth the suspicion it raises.   If the husband and his brother really do hide a $5000 job in cash once every month or so, and can each get themselves an extra $20,000 in cash that way; is it worth it once the Wife (or, worse – the IRS) – goes snooping?  Maybe just giving the wife more than she can prove will keep her from trying to prove the bigger questions?

What We Love:  Most decisions come down to the teeter-totter balancing of potential cost versus probable reward.  Adding weight to one side of that scale might be a good way to keep your own balances in check.

The fault with fault

I sat across from a very happy man. He is recently separated from his wife of 25 years. His children, through with their education, are ready for the next phase of their lives and so was he. I had known my friend for more than 20 years and this was the happiest I had ever seen him.  He had nothing bad to say about his wife. Not then, and not now. Now, after waiting patiently for 2 decades he is ready to move on with his life. He is not in a hurry. He is not dating. He is living in a world where nobody is mad at him. He wakes up in the morning and eats what he likes for breakfast that day. All day every day, he makes his decisions, he goes about his days, he does his work, and he pays the bills. But now he does all of that out of the shadow of his angry and judging wife.

Still, 20 years down the tubes can’t be easy for anyone. I asked him what he thought now that he was seeing the light at the end of this particular tunnel, of all that had happened before. He was beaming. The happiness he feels at just being alone cannot be contained or concealed. He said, “It is not anyone’s fault. We were not the right fit for each other. I love her, I will always love her. She raised my children. In fact, in many ways, she raised me. But I am looking forward to someday falling in love with somebody who is madly in love with me.”

These are not spring chickens, and dismantling a lifestyle is difficult work, but they are doing it at their own pace.  They will sell their house, establish two new residences; divide their belongings and their debts.  They will do all of that over the course of the next 6 to twelve months, one step at a time.  And, when they have completed this work, they will file for divorce.  No judge will be able to tell them who lives in what house; or how to distribute the assets.  These are wise people who have made decisions together for half of their lives.  This final batch of decisions – the ones in which they create their own ending – may be the most critical ones they have ever made.  By refusing to blame each other, hate anyone, or make things tumultuous, they are creating a future in which they will always be able to respect each other.

Sometimes the decision to divorce is a rushed and emotional result of an unhappy moment, or series of moments.  Sometimes it is a patient conclusion to a lifetime of causes and effects. Either way, the process of divorce can still be a time to carefully consider the best alternatives for everyone involved – spouses and children, even adult children.  When we focus our attention on the culprit, look for a bad guy, and aim for retribution, we risk missing the delicate and somewhat beautiful opportunity to see a bigger picture and a wider world.

What We Love:  Whoever said that patience is a virtue missed the fact that it is also a gift to one’s self.

The Stories we Tell Ourselves

World War 2 medic Henry Beecher had a limited amount of morphine in his bag. He walked across a battlefield strewn with wounded soldiers, some rolling around or crying out in pain; others lying still, quietly bleeding into the earth. Trying to figure out which ones needed his limited supply most, he would walk up to each soldier and ask him, “Are you ok? Are you in pain? Do you need morphine?”

Lying on that battlefield, soldier after soldier would take stock internally, assess the damage, and say, “No, no I’m fine. Save the morphine for someone who needs it more.”

Years later when Dr. Beecher met gunshot wound victims in the hospital Emergency Room where he worked, he often noticed that civilians with less severe injuries would experience much greater pain than the soldiers he had known.

Dr. Beecher’s work led to his discovery of the placebo effect; which is still being explored and investigated by scientists, doctors, pharmacists, and even economists to continue unraveling the complexities of the human brain.

For me, though, it comes down to “the stories we tell ourselves.”  One description I have heard of Beecher’s work is that the soldiers on the battlefield, with their gunshot wounds, just got themselves a ticket home.  By being injured, but not killed, in battle, they would be able to return to their homes and families. For each of them the war was over, and their real lives could resume where they left off.  Sure, there would be surgery, transport, paperwork, and recovery – but it would all lead to the outcome every soldier dreams about the most – being home with family, friends, and decent work.  The gunshot in this story is almost a gift.

For the ER victims, however, the movie playing in their heads would be running in the opposite direction.   The victim of a hold-up in his drug store, for example, begins to think about the gunshot wound and picture hours of surgery, paperwork, increased insurance premiums, weeks of lost work during the recovery process; an inability to go back to work, provide for the family, or maybe even the loss of the family business.  The gunshot wound in this story is the beginning of the end of happiness

The stories we tell ourselves during the divorce are the same.  Are the papers that the lawyer draws a gunshot wound delivered on the battlefield – your ticket out of the war and into a peaceful world of your own choosing?  Or are these papers served to you like a thief come to empty your cash register – the end of the blissful life you have known and the beginning of loneliness and poverty?

I have represented people in both of these positions, sometimes within the same marriage.   There are the couples who are both tired of living on a battlefield and see divorce as their exit strategy.  They tend to have short, clean, amicable splits.  And there are those couples who both see the divorce as a terrible and necessary evil caused by the other spouse.  Those couples tend to have protracted litigation as the end of their marriages.

Most divorcing couples are a combination of the two.   There is the one who feels that the marriage has been a battle and is willing to brave pain, paperwork, and an extended recovery time, just to get out. Ironically, married to the person who thought everything was fine until now.  For that person, the daunting tasks of paperwork and beginning again feel like an injustice piled on top of an insult.

The truth, of course, is that neither story is an imperative truth.  Divorce is not a physical injury. It is a largely paperwork process designed by the legal system to protect the rights of individuals and their children.  The perception of whether it is painful or helpful, of whether it is a curse or a gift, lies strictly in the mind of the beholder.  It is the choice of each member of every divorcing couple to decide whether this is a moment of liberation or a moment of tragedy.

What we Love:  When we direct our own movies, we are more likely to enjoy the ending.

The Beauty of Compassion

The first time I ever saw “Lana” she was already on the witness stand as I walked into the court room. I was a new attorney, still in my 20s. I had never seen a divorce before. I didn’t even really know anyone who had been divorced.

Most of the work I had done until then was for other lawyers, drafting the contracts they had negotiated, briefing cases they needed for court, interviewing their witnesses. I didn’t know what type of law I would eventually practice. I had a brand new shiny degree and I was still figuring it out.

I was one of three attorneys from our firm in the courthouse that day. Two of us were on a civil matter and one was handling a family case. When there was a break in one, I’d go sit in on the other to see which attorney might need my help.

I walked into the family law courtroom and slipped into an empty seat in the back row. My associate was interviewing a woman on the witness stand. The witness sat in front of the courtroom full of people and with perfect calm, grace, and poise answered every question put to her, while tears silently rolled down her cheeks.

She was only a couple years older than I was and in that moment she was becoming a self-supporting single mom. By choice. The husband was her high school sweetheart, and she loved him, but he couldn’t settle down and raise a family with her and she could no longer support him, herself, and their two year old son. She was cutting him loose, and it was breaking her heart.

I didn’t know most of this at the time.  What I knew was this, the judge asked her why she had agreed to accept decreased child support, and she looked across the room to where her husband sat staring down at his hands.   “My husband is a landscaper,” she told the judge.  “His work is seasonal and when he doesn’t have work he doesn’t have money. I can’t ask him to give me what he doesn’t have.  I know that when he makes money he’ll take care of me and Luke.”

The judge reminded both parties that if he did not “take care of her” she could always come back to court and ask for more child support.  Then he pronounced them single and unmarried.  She thanked the judge, stood up from the witness stand and walked straight past her lawyer and over to her ex-husband, where he stood waiting for her.  They did not say a word to each other.  They just stood there, facing each other, each holding both of the other’s two hands with their foreheads touching and tears falling on the floor at their feet.

I have never seen another divorce like it. I am proud to say that I became friends with Lana and more than twenty years later still count her as one of my dearest friends.  In that moment she was, in every way, one of the most beautiful people I have ever seen. I have learned so much from her strength and generosity of spirit in all of these years, but never more than I learned from her the very first time I ever saw her.

And  . . . she never had to go back and ask for more child support.

What We Love:  Sometimes giving people the benefit of the doubt works to your own benefit.