How To Prepare Your Financial Affidavit
During the divorce process, each party is required to disclose the following: their income, expenses, assets, debts and other financial-related items. Disclosure is done through filling out a financial affidavit, through formal discovery, and by other means.
All courts in Illinois now use a state-wide financial affidavit form that is available online.
Effective with the recent amendments to the Illinois Marriage and Dissolution of Marriage Act, significant penalties and sanctions may now be levied against litigants that intentionally or recklessly file inaccurate or misleading financial affidavits. 750 ILCS 5/501(a)(1).
Here are a few tips to keep in mind when preparing your Financial Affidavit:
Gather the Required Records: You will need to gather basic records to support/show proof of the information you put down on your financial affidavit. Before you embark on filling out the form, gather, at a minimum, complete copies of the following:
Year to date paystubs showing all income and deductions or other proof of income. If you cannot access your paystubs online your human resources department or office manager should easily be able to gather these records for you.
Last 3 years of personal income tax returns with all supporting schedules/documents, including W-2s, 1099’s, K-1s, and the like. If you do not have copies of these documents readily available your accountant should have a complete file of them.
Last 3 years of business/partnership income tax returns with all supporting schedules/documents (if you have an interest in a business/partnership). You may reasonably request that a protective order or non-disclosure agreement be executed prior to disclosing these documents.
Last 12 months of account statements for checking accounts (with check images) and credit card accounts. Generally speaking, you will need records of your main “operating account” or other accounts through which you pay your various bills. In addition, for any utilities or recurring bills, pull a twelve month online account history or request same directly from the service provider.
Current account statements and/or screenshots verifying any asset or debt that you list on the Financial Affidavit. Generally speaking, you will want to provide a source document showing the value and date of value for any asset or debt that you list on your Financial Affidavit.
Use Footnotes / Endnotes: Use footnotes and/or endnotes liberally throughout the Financial Affidavit to explain why you listed a certain figure or from where it was derived. You may consider including a general disclaimer that the Financial Affidavit is preliminary in nature as discovery has likely not yet closed and your factual investigation is likely continuing.
Income Section: Be careful to distinguish sources of income that are recurring vs. non-recurring or that may vary from time to time. For variable based components of income such as sales commissions or discretionary bonuses, you may reasonably list it as “varies” but should include a note that refers to supporting documentation for the prior year’s figure. Be careful to distinguish reported income from actual cash flow.
Expense Section: Be careful to distinguish what expenses are fixed each month (typically mortgage, rent, car payment, insurance premiums, etc.) vs. which expenses vary each month and are likely based on estimates (food, gas, clothing, entertainment, certain utilities, etc.). Include notes for any estimates as many categories of expenses will be based on the average for the past 6 to 12 months. Exclude any non-recurring expenses that may skew the averages. You should also try to distinguish which categories of expenses apply to the entire family vs. to you individually, and make notes on the Financial Affidavit accordingly.
Asset/Debt Section: Refer to the supporting records you gathered to verify the value of the asset or debt and the corresponding date of value. Some categories of assets (real estate, business/partnership interests, jewelry/art, etc.) may not have a readily determinable value; for those categories, it is okay to list the value as “TBD” or note that your “investigation continues” as to that particular asset. Note what assets may reasonably be considered your non-marital property or partial non-marital property, which may include that property you owed prior to the marriage, property you inherited, property that was gifted to you, etc. Refer to 750 ILCS 5/503(a) for other categories of non-marital property, the concept of which is more nuanced than can adequately be described in this post. You may also want to include a general disclaimer disclosing any accounts or assets held by your spouse or for their benefit to which you are entitled an interest.
Review for Accuracy: After your first draft, set the Financial Affidavit aside and revisit it a day or two later to check for accuracy. This will allow you some time to decompress and review the document with a fresh set of eyes. Keep in mind that significant penalties may be levied for intentionally or recklessly filing an inaccurate or misleading Financial Affidavit. After you have checked the document once for accuracy, check it again a second and then a third time. This is an important document and if your case ever proceeds to trial you will be cross-examined on it.
Update When Things Change: Life is not static. Incomes go up and down. Expenses and living situations change. Assets and debts fluctuate in value. Property gets bought and sold. Take a look at your Financial Affidavit every few months; when something has materially changed update the document to reflect that change and provide appropriate supporting records.
Filling out your Financial Affidavit is a tedious and time consuming process that can feel overwhelming at times; however, you must take it seriously. Keeping the above tips in mind will help assure that your Financial Affidavit is done correctly the first time around, which will help facilitate a timely resolution of your case.
J. Matthew Linstroth is an Associate at Katz & Stefani.