The divorce financial affidavit
Every Georgia divorce should start with a financial affidavit. This is an essential document for every divorce lawyer because the items contained therein will be, essentially, what the fight is all about. Most people who are seeking divorce are usually more concerned about the blame game or who was at fault for the break-up of the marriage. However, in almost every divorce, who is at fault is secondary to the division of assets because, after all, your quality of life will depend on how the assets are divided.
Many spouses don't know their financial situation
The most difficult divorces are those where one of the parties are unaware of their financial situation. Often, one party of the marriage assumes the role of financial caretaker. This person pays the bills, allocates money toward savings and manages debt. Rarely, if ever, do couples who are divorcing sit down and pay bills together and discuss their future financial goals. This leaves the other party in the dark about what they own and what they owe; they actually have little knowledge of their own financial situation. Filling-out a financial affidavit is very difficult for them and often eye-opening. Because, sometimes for the very first time even in a very long marriage, they can see what sort of financial situation they are in.
The Domestic Relations Affidavit (the “DRFA”)
There are parts to the domestic relations financial affidavit; in Georgia the abbreviation is “DRFA.” A DRFA is used in a contested divorce as well as in an uncontested divorce. The first part centers on the client's particulars: age, date of marriage, children. The next section is income. It is important to note how much money is paid gross, how much money is deducted for taxes, and what other deductions are taken from the paycheck, there could be many. This will often give clues as to what other assets exist. For example, if there is a deduction on the paystub for a contribution for a 401(k), a 401(k) exists and should be designated on the assets section of the DRFA. It is essential to have multiple paystubs to confirm this information. Please not that retirement accounts (pensions, 401(k) are split using in a divorce using a qualified domestic relations order (a "QDRO").
Assets in the DRFA
The next section is assets. Nearly all the conflict in a divorce is dividing the assets fairly. Unfortunately, many of the conflicts causing the divorce often also interfere in defining a “fair” division of assets. Often, this is where people are woefully inaccurate in reporting. The biggest hurdle in negotiating a division of assets is knowing that all assets have been included. The more information that you have about the overall financial picture of your marriage, the easier this section will be. Once again, paystubs can be essential. Most W-2 earners will have their pay directly deposited into a bank account. The records from that bank account can lead to other accounts and to other assets. For example, if a payment is being made to a mortgage company, a house should be listed on the DRFA. Another essential document is a tax return. Mortgage payments, interest on bank accounts, and stock (and bond and cryptocurrency) transactions should all be reflected on tax returns.
Expenses in the DRFA
The next section of the financial affidavit is a list of expenses. This should be a simple budget of all the bills that are paid every month. These bills include housing, food, transportation costs, utilities, entertainment, charity, and expenses for children. The expenses should be closely examined to make sure they are realistic monthly averages. These numbers are very important as they show if one party will be able to remain in the marital residence without the assistance of the other, in other words, if the house will have to be sold. In that case or in the case where one party will be moving, two budgets may have to be filled-out, one for the present day expenses and one for projected expenses after the party moves. Alimony is often calculated by the difference between the income and the expenses listed on the DRFA.
Debts in the DRFA
The last section is the debt or outstanding credit owed. At times, a divorce boils down to splitting the parties' debt. Also, it should be noted that debt assumed in a settlement agreement becomes a domestic support obligation which is non-dischargeable in a bankruptcy filing.
The DRFA is notarized
Finally, it should be noted that the DRFA is signed and notarized which means that you are swearing to the truth contained in the document, that you did not lie or omit anything. Keep in mind that if you end up in a trial before a judge, the financial affidavit will be one of the most important exhibits in your trial and by being as honest you are helping yourself and your divorce attorney.
If you have any questions about divorce or family law, you can all attorneys Valerie Sherman and Bill Sherman at 678-215-4106 for a free case evaluation.