What Are Financial Disclosures?
Financial disclosures are required in divorce proceedings. They are documents and forms provided by each spouse to the other spouse, creating a complete picture of all assets and liabilities.
The purpose of financial disclosures is to protect each spouse and achieve a fair outcome. When there’s financial transparency, each spouse gains a full understanding of where they stand, and they can gain assurance that the other spouse isn’t hiding any assets that are subject to distribution.
Examples of financial disclosure documents
Financial disclosures vary by state. Some states require lots of disclosures, including forms for estimated expenses. Other states don’t require as much. However, every state requires some form of financial disclosure in divorce.
Here are some of the documents you may be required to share with your spouse if you’re getting divorced.
Many states require each spouse to turn over a certain number of paystubs. It may be that only the most recent stub is required, or it may be that the last three months of paystubs are required.
Regardless of how many paystubs you must provide, the point is to show how much money is coming into the marriage. This is used to determine alimony and child support obligations.
The most recent tax returns filed by each spouse may be required. Even if you file jointly, exchanging this information shines an illuminating light on your marital financial situation. It also helps the court make alimony decisions.
Business profit and loss statements
If one or both spouses own a business, profit and loss statements may be required in financial disclosures. These statements can show how much money one spouse may be making from the business – something the other spouse may be unaware of, especially if they’re not involved in the business.
Usually, the petitioner files their financial disclosures when they file the petition for dissolution of marriage. The disclosures are served on the spouse along with the petition. The respondent then has time to review the petition and financial disclosures before filing their own form and serving it on their spouse.
For every bank account, checking account, and savings account, whether held jointly or individually, you’ll need to provide statements. Again, the point here is to make sure there’s absolute transparency about the financial situation of each spouse. Some spouses may try to hide assets in an effort to avoid paying alimony or child support. By providing all statements, this becomes less likely.
Retirement and investment account statements
Any retirement contributions or investments made during the marriage are subject to marital distribution. To ensure the full amount of money is considered, you and your spouse will be required to provide all brokerage statements showing your individual and joint retirement and investment account statements. You may be required to provide statements dating back to the start of your marriage to show how much of the account is subject to marital distribution.
Paperwork requirements vary by state, so check your state and county court website for details. Or, contact Hello Divorce to get state guidance for your divorce.
Do both spouses need to complete financial disclosures?
Many laws surrounding marriage and divorce vary by state. While some states share similar laws, other states have wildly different laws. But one consistent aspect of divorce across the states is financial disclosures. When required in a divorce, both spouses must complete this paperwork.
Here are some reasons why it’s required.
Fair and equitable division
All marital property is subject to division in divorce. If one spouse does not complete a financial disclosure, the court isn’t aware of whether the property division is fair and equitable. When both spouses complete financial disclosure, it promotes transparency in the divorce – regardless of whether the spouses resolve their disputes themselves or with the help of a judge.
No hiding assets
Having both spouses complete financial disclosures makes it less likely that one spouse will hide assets. While it’s true that separate property remains individual property, all marital assets are subject to distribution in divorce. If your spouse attempts to misuse marital property or hide assets, it’s more likely that you, your lawyer, or the judge will find out and be able to take action.
Each spouse must serve a copy of their financial disclosures on the other spouse. You must include the relevant documents, statements, and other evidence of assets when you serve your spouse. Your spouse must do the same for you.
Financial disclosures can be long documents. While some states have short-form financial disclosures for divorcing couples with limited assets, these are usually only available when your marital assets are quite small – often less than $50,000. So, for most couples going through divorce, you’ll need to complete the longer financial disclosure forms.
Can the financial disclosure requirement be waived?
In rare cases, courts may allow spouses to waive the financial disclosure requirement. If you have any questions about your marital assets or think you might be getting an unfair distribution, however, waiving financial disclosure is not recommended. Luckily, the financial disclosure forms are the same whether you’re the spouse filing for divorce (the petitioner) or the spouse responding to the divorce petition (the respondent).
If you’re not yet a Hello Divorce member, consider setting up a free 15-minute phone call to get answers to your questions about divorce. Our friendly staff can advise you of your options and help you formulate a plan.
At Hello Divorce, our mission is to help all people who want out of their marriage to find an affordable, convenient, and low-stress path to divorce and their next life chapter.
- California residents, check out Info and Documents You Need for Financial Disclosures in California
- Colorado residents, check out Colorado Mandatory Financial Disclosures: What You Need to Know
- Utah residents, check out Info and Documents You Need for Financial Disclosures in Utah