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 accurately 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 surprising to 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.

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 financial 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 retirement 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, ironically, 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 deposition 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.

A Hidden Treasure Chest

Photo by Suzy Hazelwood on

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 Cost of Divorce

Image“How long will this take, and how much is it going to cost me?” This is a question divorce attorneys frequently hear from their clients.  Sometimes it is a question regarding an aspect of the divorce – such as a custody modification, or the entire divorce.  It is an interesting question.

First, there are some basics, most states have a statutorily mandated waiting period – ranging from 6 weeks to 12 months – during which you cannot get divorced.  So it will take at least that long; and a lot of law firms charge a minimum non-refundable fee set aside to retain their time for this matter – so it will cost at least that much.

Imagine you are working as a maître d’ in a high-end restaurant and a man walks in by himself, and walks up to you and says, “How long will this take, and how much is it going to cost me?”  What would you tell him?  You might start by asking a few questions of your own, finding out the size of the party; whether it is a special occasion; whether someone else is planning to pay the bill, etc.

Here are a few questions written in “restaurant” and translated into “divorce” to give you a feel of how long a divorce might take, and what it might cost.

RESTAURANT:   How many people are in your party?

DIVORCE:  Do you have any minor children?

ANSWER:  The more people – the more the bill is likely to cost.

RESTAURANT:   Is this a special occasion, such as birthday or anniversary?

DIVORCE:  Do you foresee a fight about custody or asset distribution?

ANSWER:  These items will tend to increase the cost of the bill.

RESTAURANT:   Will you be paying your own way, or is it a gift?

DIVORCE:  Are you financing this from your own pocket or someone else’s?

ANSWER:  While it will cost the “patron” nothing, people have a tendency to run higher bills, and take a longer time, when it is not their own money funding it.

RESTAURANT:   Do you have tickets to a show this evening?

DIVORCE:  Is either of the parties pregnant, or involved with someone else?

ANSWER:  Just like theater patrons who need to have a quick bite and get out the door, divorcing parties can find ways to shorten the process if they have already found their next relationship.

RESTAURANT:   Will anyone be consuming alcohol?

DIVORCE:  Will anyone be consuming alcohol?

ANSWER:  Nothing sky-rockets a restaurant bill like a few cocktails, or a bottle of wine.  Similarly, nothing makes an already unhappy couple find reasons to fight like letting them drink at the wrong times or in the wrong combinations.  Even amicable people seem to pick fights when they have had too much to drink.

Every case is different, and each divorce has its own built-in trajectory of how long it is going to take from when the first party knows a divorce is necessary until a judge declares them both single and unmarried.  You can affect some, but not all, of the variables.  Knowing what to expect, though, can help make the process more palatable.

What We Love:  Speaking of restaurants – why not start planning your divorce party, to give you something positive to focus on, while the process takes its time.

Matching Program


If I  could remind my clients of just one thing while they are going through the divorce process, I would say it is this: That is NOT your money that you are handing over to the lawyers.  That money belongs to your  heirs.  That is your  kids’ money, and 85 – 90 % of the time, the only reason the clients  are spending it is because their bruised egos are making the decisions, not their hearts, and usually not their brains.

If I could restructure divorce laws the first thing I would do is put a matching program in place. For every dollar a divorcing adult spends on attorneys, court fees, depositions, and expert witnesses, they have to put a matching dollar in a savings account for their children. That savings account may have to go to child therapists, or special vacations to make up for hurt feelings, or might end up being a college tuition fund, if all goes well.

It would accomplish two things: first, it would keep the emphasis where it really belongs in these matters: on the next generation, the only true victims of divorce.  And second, it would make the litigants run out of money faster.  People really start getting reasonable and finding common ground after all of the money runs out.  My question is, if they were going to get to a reasonably hideous compromise anyway, why not do it at the beginning, instead of waiting until there is no more money?

One major reason, is that the legal track cannot really get ahead of the emotional track.  Until both parties are tired enough of the fighting, it is possible to prolong the process for years.  I have seen people have custody battles over a dog, an engagement ring, and – no lie – a weed whacker.  If you feel the need to fight, you can.

BUT, if you have a reasonable attorney who is trying to get you to the end of the process with as much of your sanity and bank account intact as possible, the million little fights can go away more quickly and easily.  Even more so if there are two reasonable attorneys in the matter.

It is true that if one party is intent on fighting and wracking-up bills, it is more difficult for the other party to keep the costs de minimis.  But, that is not to say it is impossible.  Pro se (or self-representing) parties can save a lot in lawyer fees.  I would recommend that they have an attorney on retainer for advice & counsel if not for the actual practice so that they know what is true and what is bluffing from opposing counsel.

The biggest key to keeping costs low against a litigious attorney is complete transparency.  Try to get a list of required and requested discovery as early as possible, either from opposing counsel or your  own attorney – and hand over absolutely everything, and keep sending it in as often as new statements come out.

The quickest way a litigious attorney can increase lawyer fees is by making unreasonable claims for discovery, and then going to court for non-compliance. Be meticulously, over-zealously compliant.  Show everything, and there will be fewer trips to court, and fewer grounds for accusations.

What we love:. As long as there is a desire by either party to stay engaged – to keep fighting, if that’s what it takes, the process continues.  But, as soon as the emotional issues are resolved, the divorce takes care of itself.