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One of the first things divorcing spouses will have to do when a divorce action is commenced is to exchange financial information with one another. Each spouse, with the help of their attorney, will have to fill out their own individual financial form called a Statement of Net Worth, or an Affidavit of Net Worth.
On this form, parties must describe their entire financial background – all their income, assets, expenses, outstanding debts, etc. It’s tedious and often quite complicated, because people tend not to realize how much they have, owe, or spend until it’s time to put it down on paper. The form itself is also a bit confusing: Do you include only your own personal expenses or also those of your children? How are you supposed to calculate how much money you spend per month on groceries, laundry, or eating out?
Filling out these forms must be done with care, which is why seeking the assistance of an attorney is highly suggested. Guessing or pulling numbers out of thin air can be dangerous because, in addition to the fact that Statements of Net Worth are sworn to under oath, (i.e. it could be a crime to fill them our incorrectly), they will also be used by the attorneys and the court to make important determinations with regard to many aspects of the divorce, such as child support, spousal support, and equitable distribution.
Plus, your spouse likely has a good idea of what you should be listing and will probably know when something is amiss. Getting caught in a lie will not only run you the risk of being found guilty of perjury but it will sacrifice your credibility with the court, which won’t help your case.
One major item parties will have to list on their Statements of Net Worth is their income. Sounds straightforward enough….right? Not exactly…
The definition of “income” isn’t necessarily what you might assume. One’s “income” is not simply his or her salary, for purposes of this form. The definition of “income” is very inclusive; it basically accounts for any “money coming in” to a party’s possession. It includes one’s salary, money obtained from investments/interest/stock dividends, bonuses, tips, disability, pensions/retirement benefits, lottery winnings, gambling winnings, royalties, Social Security, public assistance, and more. This is very, very important to know.
A sneaky or unwitting party may think it’s okay to “forget” to list certain items. Other parties might be unsure of what to do when their incomes fluctuate over time, or what to do about business expenses. Or, even worse, what do you do when your income, as it should be listed on your Statement of Net Worth, is different than what you reported on your taxes….
It should also be noted that even if all the t’s are crossed and the i’s dotted on one’s Statement of Net Worth, a court can impute income to a party as they deem appropriate. This means that for purposes of calculating child support, for example, a court can look at a party’s Statement of Net Worth and say, “Well, even though you’ve listed only $55,000 as your annual income, your parents have been cutting you $20,000 checks over the past 10 years, so we’ll include that, too.” Or, “Well, even though you list only $55,000 as your annual income, your lifestyle indicates that your salary is at least double that…”
As you can see, filling out a Statement of Net Worth can be quite confusing and even risky. You may have questions when forced to put pen to paper. Contacting an experienced divorce / matrimonial / family law firm such as Peter L. Cedeño Associates in NYC to help you through the process is a smart choice.
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