Episode 87 of the Divorce and Your Money Show is the final part of this series on Financial Affidavits, also called a Statement of Net Worth.
If you did not hear the first two parts of this series, be sure to go back and listen to them. At this point, you have filled out your Financial Affidavit. Now you need to be able to review your spouse’s Financial Affidavit, so that you can ensure an accurate settlement.
Is the Income Section of the affidavit correct? Is your spouse hiding income via contributions to a retirement plan? Review the total income, and make sure all benefits are included.
If your spouse was a small-business owner, you want to collect the business’ tax returns, and have an accountant go over it. There are many expenses and deductions that can be used in a business, which may affect their Income levels— and therefore the settlement.
Do the assets and debts make sense? There may be items missing, or the value of the assets may not be accurate. States differ on the ability to calculate the value of an asset, so be aware of your state’s laws. Make a list of questions to review with your attorney.
Mistakes may not be malicious; they may just occur because of sloppiness. Therefore, verify for accuracy; the Financial Affidavit has the biggest impact on the financial repercussions of your divorce.
Key Learning Points
- As the Income Section is the most important part of the settlement, make sure the it reflects your overtime, deductions to retirement plans, and benefits that are not usually calculated (e.g., income).
- Closely held businesses are complicated, and may require the use of an attorney and forensic accountant. It is very easy to hide income and cash-flow in a business.
- Assets and debts need to be checked for accuracy. State laws can affect the calculation models for the value of an asset, so know your local laws.
- Mistakes may be made through laziness or maliciousness. However, the Financial Affidavit has a major impact on the settlement, so get professional help for both your Financial Affidavit and your spouse’s.
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