Financial Affidavit

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If you have ever dealt with a family lawyer or estate planning lawyer, you have probably heard the term financial affidavit mentioned at least once. There are different types of financial affidavits and different states use different names for the document. To better understand what a financial affidavit is, you must understand what it is, when it is used, how it is used, and the purpose of a it.

What Is a Financial Affidavit?

Though legally binding, a financial affidavit is not a written contract or a signed contract. A financial affidavit is a written statement that shows your income, expenses, assets, and liabilities. A financial affidavit is a complete picture of your financial situation at the time that you (the affiant), signs the document. Financial affidavits are presented to courts under oath.

There are different types of financial affidavits, and the affidavits are sometimes referred to as a different name. Following are a few types of affidavits.

  • Affidavit of domicile
  • Affidavit of heirship
  • Affidavit of marriage

Different names that a financial affidavit is referred to are as follows:

  • Statement of financial affairs
  • Financial statements
  • Net worth statements

Here is an article to help understand financial affidavits.

What is The Purpose of a Financial Affidavit?

The purpose of a financial affidavit is to provide the court with an explanation of the affiant’s financial circumstances. Without a clear picture of a person’s financial situation, it would be hard for a court to make determinations and issue court orders relating to property distribution. A well-prepared financial statement will help bolster a party’s credibility with the courts.

Financial affidavits are used in different situations, such as domicile related cases, divorce cases, business related cases, and estate planning related cases, just to name a few. In each of these situations, courts need to know the financial circumstances of the parties involved.

Following are brief explanations of the previous affidavits mentioned:

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Affidavit of Domicile

An Affidavit of Domicile is a short legal document that helps to establish a person’s place of residence following his or her death. The affidavit of domicile is primarily used in probate court. Probate court is the court that helps distribute the decedent’s property to his or her heirs.

Affidavit of Heirship

An Affidavit of Heirship is a sworn statement that heirs can use in some states to establish property ownership when the original owner dies intestate. Affidavits of Heirship is generally used when the decedent had a small estate and only left real or personal property.

Affidavit of Marriage

An Affidavit of Marriage is a document that is submitted to a court, University or other institution in order to verify that a person is married. Verification of marital status might be needed to get health insurance, get a passport, visa, or other government related documents.

Financial Statements

Financial statements are written records that convey the business activity and financial performance of a company. Financial statements include the following:

  • Balance Sheet
  • Income Statement
  • Cash Flow Statement

If one of the parties owns a business or has a financial interest in a business, financial statements can be requested by a court in a divorce case and other cases.

Here is an article that explores the purpose of financial affidavits.

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When are Financial Affidavits Required?

A financial affidavit is required when the courts need to determine the financial situation of a party involved in a case. Example, if you are a party in a divorce, child support, or spousal support related case, a Domestic Relations Financial Affidavit needs to be completed. The financial affidavit is supposed to state the true financial picture of the affiant.

Your lawyer will inform you when a financial affidavit is required. In the following circumstances, a financial affidavit is required.

  • On the date of divorce
  • On the case management date
  • In connection with any pendente lite or post judgement hearing
  • Depending on the judge and the circumstances, a financial affidavit may be required in connection with a contempt hearing

Financial information shown on the affidavit shows whether property is marital (subject to division by the spouses), or separate, which belongs to the spouse who brought the property into the marriage. A financial affidavit must also include information about inheritances, gifts, or large sums of money received by the affiant.

Here is an article related to when financial affidavits are required.

What Does a Financial Affidavit Include?

Relating to a divorce or child support case, a financial affidavit must include the following information:

  • Docket number and name of the case, including the names of both parties
  • Your income from all sources, including overtime, bonuses, social security, tips, interest, other spousal support, and commissions
  • Expenses, including home expenses, even if both spouses are responsible
  • Any inheritances, gifts, or money damages received as a result of a court case
  • Deductions that you take on your taxes
  • Names of children, their ages, and their expenses
  • Extraordinary expenses, such as tutoring, cost of transporting a child to an out-of-district school, and the cost of the school itself
  • Health care costs, including out-of-pocket costs
  • Other insurance costs
  • Payments to maintain your professional license
  • Debts you pay and whether they’re in your name or in both spouses’ names, including credit cards, student loans, and the IRS
  • Assets, such as homes, cars, boats, stocks, retirement plans, antiques, or other collections

There are times when a financial affidavit requires that you attach your W2 form paystubs, and/or income tax return. As this is the case, you do not want to minimize your expenses or inflate your income. You also should not sign the affidavit until you take it to a Notary Public.

Here is an article related to the information that must be included in an affidavit.

How To Complete a Financial Affidavit

As each case is different, prior to preparing your financial affidavit, your lawyer should speak with you about your financial circumstances and a strategy behind preparing a financial affidavit in your case. You should carefully read the instructions, even if you are planning to have the lawyer, or someone else complete the affidavit for you.

If you are completing the financial affidavit, you should start by gathering the following documents:

  • Income Section : those documents may include recent pay stubs, profit and loss statements, and tax forms (W2s, K-1s, and 1099s).
  • Expense Section : those documents may include household bills, bank statements and credit card statements. The expenses reflected on a financial affidavit should be regular and recurring. One-time expenses such as new aluminum siding for the house should not be included on the affidavit.
  • Assets Section : those documents may include retirement account statements, capital account statements, appraisals, bank and investment account statements, stock award letters and vesting schedules.
  • Liabilities Section : those documents may include bills, statements or notes.

After you have gathered the necessary documents, the next step is to calculate your monthly expenses. Your calculations should be as precise as possible. Once the calculations have been completed, provide the calculations and relevant documents to your lawyer. Your lawyer will then arrange the information in a format that is approved by the court in which your case is pending.

This article relates to how to complete a financial affidavit.

Get Help with a Financial Affidavit

Do you need to create a financial affidavit and don’t know where to look? Most family or estate planning lawyers can help you prepare this document.

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