The importance of financial affidavits in divorce, and a new, smart tool to help your clients get it right.

By Jeff Landers, Financial Advisor

As a divorce professional, you know how important it is to understand your client’s finances in as much detail as possible. You need thorough, detailed documentation of all assets and liabilities, income and expenditures. Without it, you can be hamstrung when it comes to negotiating even temporary support, not to mention a fair settlement agreement.

Granted, the Financial Affidavit provides a specific legal format for presenting financial information to the court, formalizing the process and theoretically, at least, helping to ensure nothing is unaccounted for. But completing the form can be extremely complicated and overwhelming for the client. First of all, it’s called different names in different states, so the client may find it difficult to search for information online. (New York uses a “Statement of Net Worth.” Couples divorcing in New Jersey file a “Case Information Statement (CIS).” Meanwhile, South Carolina and Utah courts require a “Financial Declaration,” and others, including Connecticut, New Hampshire and Florida, simply call it a Financial Affidavit.) And then, there are variations in the requirements between states, and sometimes even between counties within a state. On top of all that, you can only work with what you’re told –and unfortunately, clients often have an inaccurate perception or incomplete picture of what they own and owe, earn and spend.

If you’re not confident that your client has gotten things right on the Financial Affidavit, that can put you in a difficult position. While you will certainly spot obvious errors, omissions and inconsistencies, some individual line items can be troublesome. If a reported amount is reasonably consistent with the rest of the client’s expenses, income, assets and marital lifestyle, how can you tell if it isn’t accurate? How can you know for sure, for example, whether your client actually spends $200 or $700 –per month on clothes, unless you and/or your staff go through all her credit card, bank and brokerage account statements (and do you really have time for that)?

On one hand, the responsibility for accuracy sits squarely on the client’s shoulders, and if the details aren’t important enough to the client to get right, then maybe the consequences aren’t so important, either. (To be clear, I’m talking about honest errors here, not deliberate misrepresentation.)  On the other, errors in estimation that seem minor in any one line item can add up significantly. Scrambling to account for “missing” money reflects badly on both attorney and client.

Help for Your Client is Help for You, as Well

Handling the legal complexities of today’s divorces puts enough on your plate. Advise your client to consult with a divorce financial advisor, who will complete a Lifestyle Analysis and the Financial Affidavit on their behalf. (As you well know, a Lifestyle Analysis identifies a couple’s spending habits and day-to-day living expenses incurred during their marriage, with an emphasis on the last few years. It includes recurring and ordinary expenses, as well as non-recurring and unusual ones. This Lifestyle Analysis can serve as verification of the net worth and income and expense statements submitted by both spouses.)

A skilled divorce financial advisor can also spot signs that a spouse might be hiding assets. Hiding assets and/or income is underhanded, illegal and, as you know, distressingly common. Advise your client to work with a professional who knows what to look for.

More Help is at Hand… Literally!

Wouldn’t it be great if clients had a fun, easy-to-use tool to track daily spending, so that when it comes time to itemize it all, nothing’s forgotten?

Enter the CASH™ Smartwatch, a lightweight, wearable expense tracker designed by TV news anchor and finance guru Nicole Lapin, who wants to help women become more financially literate.

“Personal finance is not something that’s necessarily taught in school, and if you’re like me, your parents might not have talked to you about it,” Lapin told me. “So, many women today are lost, confused, scared or intimidated by money management. I saw a void in the marketplace, and I created a tool to help women better understand their personal finances.”

CASH helps people track expenses they might otherwise forget: cab fare on a rainy day, a latte here and there, a paperback at the airport newsstand. Over time, such things add up to much more than people tend to think. Guessing on a Financial Affidavit can result in a very inaccurate representation of living expenses. With CASH, impulse spending and small miscellaneous purchases can all be recorded on the spot, so they can’t fail to make it to the Financial Affidavit.

“There has been incredible success with single-function wearables, devices that calculate only calories or steps or sleep,” Lapin explained. “A wearable is a constant reminder –in this case, a constant reminder that you are on the road to becoming financially fit. If you were to use an app instead, you run the risk of being distracted by Instagram, texts or other apps. The Smartwatch is a physical reminder that you are on a mission to financial fitness.”

“I am really passionate about helping women who are ready to take control of their lives and finances,” Lapin said. “It’s not as difficult or scary as you might expect –once you have the right tools.”

The Smartwatch is a stylish way to help record expenses before divorce, and help stay within budget afterwards. I tell my clients it’s a great way to Think Financially, Not Emotionally™ – always a smart strategy for ensuring a secure financial future.

Jeffrey A. Landers is a Certified Divorce Financial Analyst® and is also the founder of Bedrock Divorce Advisors, LLC, a divorce financial advisory firm that works exclusively with women throughout the United States and, a website created to educate, empower and support women before, during and after divorce.