Financial disclosure – what is it?
The most typical question we get as lawyers from clients who are separating or divorcing is, "What is financial disclosure in family law?"
If you and your spouse are divorcing or separating, you must exchange your financial information if:
you're determining child or spousal support, or
you're splitting your family's assets and obligations (including pensions).
This is known as financial disclosure. It entails providing each other with complete and accurate information about your income, spending, assets, and obligations.
Your financial disclosure assists you and others, such as lawyers, mediators, or the court, in determining:
who needs to pay child or spousal support,
how much support the payor (the person who pays support) has to pay,and
how your family's wealth and liabilities should be shared.
How frequently do you need to provide complete financial information?
To ensure that the child support or spousal support order or agreement is fair, you and the other party must disclose all relevant financial information when determining the order or agreement for the first time.
You have to provide all of your financial details if you have a child support order or agreement:
every year, to ensure that the order or agreement is still reasonable, and
if your financial circumstances changes (for instance, when you receive a salary increase or a pay decrease).
Read your spousal support order or agreement carefully to see what it specifies on how frequently you must disclose your whole financial situation.
What happens if you refuse to give part or all of your financial information?
If you do not provide complete and accurate financial information, the court may:
Change the agreements you agreed with the other person, vacate a court order or a separation agreement you negotiated,
order you to pay backdated (retroactive) support,
fine you or require you to cover the other person's legal expenses, or impute income to you (by stating the amount of income they feel you have that is appropriate for calculating support).
If you failed to provide complete financial information or made an error when filling out your form, update the court as soon as possible.
To ensure that your children receive the assistance they are legally entitled to, you must know both parents' actual earnings when calculating child support.
To calculate child support using the Child Support Tables published by the federal government, parents frequently utilize line 15000 of their most recent income tax return.
However, to provide a more thorough and accurate picture of your finances, you might need to include your previous three years' income tax returns or corporation returns in your financial declaration if one of you is self-employed or runs a business.
Sometimes just one parent must provide proof of income. This is the scenario when all of the children reside with only one parent and no special costs are incurred.