A Financial Statement. It may sound simple enough but this document could be the most intensive exercise you undertake and is an essential step in your Family Law matter. A properly prepared Financial Statement is critical to settlement and is the cornerstone of financial disclosure, a term you will encounter often.
A Financial Statement is a form which sets out information about your income, expenses, property and debts, and helps to determine support obligations and property settlements. The laws and rules which govern a Family Law matter are very clear when “full and frank disclosure” is required. There are always exceptions but most Family Law matters require that a Financial Statement accompany specific documents served on the other side and filed with the Court. You should be aware that the Court can refuse to accept documents if they do not include a mandatory Financial Statement or may refuse the statement itself if it does not include income tax documents.
In addition to Family Court matters, Financial Statements are also exchanged as a step in the negotiation of Domestic Contracts such as Cohabitation Agreements and Marriage Contracts (also known as “prenuptial agreements”) and Separation Agreements. Domestic Contracts will be discussed in more detail in future postings.
Your obligations to provide disclosure includes the responsibility to keep financial information current. Financial Statements are usually updated before conferences, motions and trial and should be updated to advise of a material change in your life. Your spouse and his or her lawyer may be aware of your change in jobs or perhaps an illness or injury but the Court is not an active participant on a day-to-day basis in your matter. It is also common to update a statement if you discover incorrect or incomplete information; however, these kinds of updates (and the cost involved) can be significantly reduced when your Financial Statement is done right the first time.
A Financial Statement that is prepared and substantiated with the proper documentation as early as possible can reduce the time and expense of litigation. Like an affidavit, it is sworn under oath as a sworn statement of fact. As a result, it can establish a party’s credibility. There are no tactical advantages gained by serving a Financial Statement that lacks accuracy or details. A party who embellishes his or her expenses and debts or is reluctant to disclose information thought to be “nobody else’s business” only fosters mistrust in an already emotionally charged process.
Your Financial Statement is just that – yours. It is a “snapshot” of your financial situation in the past and today and is important in determining your financial situation in the future. The form can be modified to personalize it or incorporate notes and schedules.
You will be asked to gather many documents, which step will be repeated each time you update your statement. The documents you produce are also a part of your obligation to make full financial disclosure. They will help to establish values, ownership and whether a value is to be included in your net family property, such as a bank account opened after separation. Most if not all of the documentation is available to you if you know who and what to ask for. The internet is a time-saving tool and may enable you to obtain balances for multiple accounts on one summary.
In upcoming postings, the 3 law clerks in Barriston’s Family Department will be reviewing the individual sections to a Financial Statement and discussing the necessary disclosure specific to each.