Michigan is an equitable distribution state when it comes to divorce, meaning that all assets and debts acquired during the marriage are considered jointly owned and are subject to a fair and equitable division between the spouses. Each party will be required to submit a financial affidavit to ensure that all assets and liabilities are accounted for throughout the divorce process. For more information on affidavits and their role during your divorce, reach out to an Oakland County property distribution lawyer today.
What’s a Financial Affidavit?
A financial affidavit is a legal document that provides information regarding an individual’s financial situation. It is typically required by a court or other authority for various legal reasons, such as during a divorce, child support case, loan application, or bankruptcy proceedings.
The affidavit requires full disclosure of the following information.
- All sources of income including salaries, bonuses, commissions, investments, etc.
- All monthly living expenses such as rent, mortgage payments, food, utilities, transportation, insurance, and more
- Any and all property including real estate, bank accounts, retirement funds, cars, boats, antiques, jewelry, artwork, and other valuable items
- All debts and liabilities like credit card balances, mortgages, car loans, student loans, personal loans, or other financial obligations
Important documents that may be required to demonstrate the above information include pay stubs, tax returns, W-2s, 1099s, bank statements, credit card statements, invoices, receipts, real estate appraisals, property valuations, and more.
Why Are Financial Affidavits Important During Divorce Cases?
The main purpose of a financial affidavit in a divorce case is to provide the court with a clear picture of each spouse’s income, expenses, assets, and debts. Divorce settlements involve a variety of topics including financial issues like the division of marital property and obligations like child support or alimony. The financial affidavit ensures that both parties have disclosed all relevant financial information so that all financial issues are resolved in a way that is fair and equitable.
For example, a financial affidavit can help the court determine the amount that one spouse is required to pay in alimony to the other or how much child support should be awarded. By evaluating each spouse’s total financial situation, the court will understand each individual’s needs and ability to pay as well as the standard of living the pair has grown accustomed to over the course of their marriage. With this information, a fair decision can be made regarding which spouse should be paid and how much.
Sometimes one or both spouses attempt to conceal assets or streams of income to make it seem like they have less than they actually do. If successful, this would allow them to avoid having those assets be subject to property division and their spouse would be cheated out of joint property that they may be legally entitled to. The use of financial affidavits during divorce proceedings ensures full transparency and fairness throughout the legal process.