You have a consultation with your lawyer and discuss your marriage and what is involved in separating from your spouse. You get some advice from the lawyer and decide to move forward with your separation.
You are then contacted by the lawyer or a member of the lawyer’s team with a long list of ‘demands’ asking you to fill out a Financial Statement (which is overwhelming itself), but also to provide you with a bunch of documents like income tax returns and bank statements.
Not only that, but they want bank statements from the date you got married, the date that you separated AND today’s date.
But why?
It’s all related a legal concept used in our judicial system to divide the equity that was built up during your marriage between you and your spouse on an equitable basis. This legal concept is called ‘Equalization of Net Family Property’ (a topic for another blog). It’s also related to determining whether and what amount of child or spousal support may be owed.
As part of the Equalization of Net Family Property process, we need to determine what you owned and owed both at the date of marriage and at the date of separation. This is why we do a Financial Statement, which sets out your date of marriage assets and liabilities as well as your date of separation assets and liabilities (to determine the amount of equity built up during the marriage).
The current date column in the Financial Statement is less important and comes into play in certain instances (perhaps the topic for another blog) but because your Financial Statement is a sworn document, it’s critical that it’s accurate.
When negotiating with your spouse, we need to be able to verify the statements in your Financial Statement. This means producing bank statements/loan statements, and so on which show the balances of accounts and debts at the date of marriage and the date of separation in order to prove the amounts that are listed in your Financial Statement. Why? Even if we (as your lawyers) believe that you have entered accurate numbers into your Financial Statement, we need to prove these numbers to the lawyer for your spouse and, if it goes to court, to the Judge. The back up documentation ensures that there can be no question that the numbers in our Financial Statement are correct.
If you have been married for a long time, it is possible that your bank and loan statements are not available at date of marriage. This is understandable and the date of marriage entries on a Financial Statement are often stated to be estimates.
Similarly, if support is an issue, then you can’t just say what your income is, you have to be able to prove it. Lawyers and judges know that this information should be easily available. We all have to complete tax returns, and we all receive notices of assessment and we have to keep the information proving your income for tax purposes. As a result, your lawyer should be asking for tax returns, notices of assessment, pay stubs and possibly other documentation proving your income.
This is a brief explanation of Financial Disclosure. This can be fairly straightforward, or it can be extremely complicated, depending on your situation. If you have difficulty in completing your Financial Statement or gathering your Financial Disclosure, you should speak to a member of your lawyer’s team for assistance.
Written by Pam Walters