It is very common for individuals going through the process of divorce to be intimidated by the task of gathering their financial documents, and the concept of putting together a “budget” is almost a paralyzing thought. The first step is to take a deep breath and focus on one piece of the financial affidavit at a time. Hopefully, you will have a few days to work on your DRFA before you need it for court or mediation.
Financial documents can be broken down into 4 general categories:
- Income
- Expenses
- Insurance
- Debt
- Living Trust (visit sites like https://www.cunninghamlegal.com/ for more info)
Income
If you are employed, locate your last paycheck. If you are able to download your paychecks from the first of the year, that will be very helpful. In addition, you will need W-2 wage and tax statements for the last filed return. If you are not currently employed, it is essential that you obtain a copy of your Social Security earnings statement. It is available on-line at www.socialsecurity.com
In many households it is common for one party, usually the husband, to take care of filing taxes and the other spouse is totally “in the dark” about the filing of taxes. If you are the spouse “in the dark”, do not panic. As long as you filed joint tax returns, you are entitled to receive a copy of all returns. It is also possible for you to obtain abbreviated tax returns in less than an hour. Most likely your accountant is able to get your tax return while you are in his/her office. Your W-2 should be readily available from your employer.
You will need to obtain your Federal and state income tax returns for the last three (3) years, which include personal returns, and returns filed by any partnerships, or closely held corporations in which you have are any ownership. If you did not file a return you will need all W-2s, 1099s, and K-1s for the last three
If you are self-employed, your first step is to get a copy of your profit and loss statements since your last tax return was filed. If you are not currently working, your first step is to start with your retirement, including Individual Retirement Accounts, pensions, profit-sharing plans, Keogh plans, 401 (k) plans and any other retirement investment accounts. It is preferable that you have the most current statement. However, it is most important that you identify all of your individual accounts, and joint accounts. Once you have the accounts listed on your DRFA, then you can contact the financial institutions for any statements you are missing. In the best of all worlds, gather at least the last twelve months of statements. It will be very helpful, if you can get thirty-six months of statements. If either you or your spouse has life insurance with a cash or dividend surrender value, do your best to obtain the most current statement.
Expenses
The next step is gather your last twelve months of bank statements, credit card statements, and any notes that you may have which would assist you in recalling your cash expenses. If you maintain your monthly expenses in a financial software program like Quicken, this part of your financial affidavit will be “a piece of cake.” But if you are like most people, and do not have all your finances on the computer, you will need to do a little searching. With some clients, it a more like a “treasure hunt.” American Express and other credit card companies will provide an annual summary of your charges. If you do not routinely receive summaries, call each credit card company and ask for them. Many credit card companies will send duplicate credit card statements without a charge. Others may provide the most recent statements for free, and then a charge per month. If you pay some of your bills with cash or money orders, you will need to contact each provider to get copies of your previous bills or a summary statement.
If you have children that have not completed high school, you will also need to obtain statements from any provider of services for them. It is easy to forget all the monies that you have paid for school lunches, school trips, school pictures, overdue library fines, etc. for your children.
One “low-tech” technique to isolating your expenses is to use different colored highlighters to designate different items on your credit card statements and bank statements. This may include the household expenses (routine and occasional), automobile expenses, children’s expenses, your personal expenses (grooming, medical, meals out with friends, clothing, etc.), your children’s expenses, your pet expenses, bank and credit card fees.
Insurance
The next category to locate statements for is insurance. You will need to have a copy of homeowner’s, automobile, life, disability, medical, dental and any other insurance policies you have. If you have separately scheduled personal items, such as jewelry or art work, it will be very helpful if you have a copy of the appraisal and/or bill of sale. If you do not have copies of these documents, most insurance companies will provide copies at no charge. But it may take ten days for you to receive the copies. You may want to ask your attorney to request the statements. It is not unusual for insurance companies to respond more quickly when a lawyer’s office calls.
If you or your spouse either jointly or individually own (or co-own with third parties) any rental and/or investment properties, you will need to collect all bank statements, tax bills, and any documents related to the asset(s).
Debt
The last – but certainly not the least important category is debt, either joint debt acquired during the marriage or individual debts acquired either before the marriage or other non-marital debt. In many marriages the marital debt accumulated may surpass the assets acquired during the marriage. This is particularly true in the current real estate market. Locate all mortgage statements for the past twelve months. If you do not have the statements, as long as you are on the mortgage you will be able to request statements directly from the mortgage company.
If there is a home equity loan attached to the marital house, you will need those statements also. It is very common for parties to have a first mortgage and a second mortgage with different financial institutions.
If the marital home has been refinanced, it will be very helpful to have the closing statement and any other documents for the new loan. Many people do not have this information, and are unaware as to the terms of the refinance. (It is also not uncommon for the financially “savvy” spouse – but somewhat dishonest to forge the financial naïve party’s signature on refinance documents.)
Fortunately, real estate documents are filed in each county, and you can go to the real estate tax office to do your own search. Your attorney can hire a real estate professional to perform a title search to view all legal documents related to your marital home and any other property. The records are public, and many counties have the documents online.
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