Utah Divorce and Your Financial Declaration: Why it Matters, and How to Prepare It the Right Way

In every Utah divorce case, the parties must prepare what is known as a financial declaration. The parties to a divorce action are required by the rules of court to provide each other with their financial declarations.

With rare exception, divorce litigants struggle with preparing a complete, accurate, truthful financial declaration. We prepared this video (and an accompanying blog post) to help you 1) overcome procrastination, 2) understand the purpose of each part of your financial declaration, and 3) persuade you, we hope, not to give in to the temptation to lie on your financial declaration or try to hide anything from disclosure on your financial declaration.

1. What is your financial declaration?

Concisely stated, your financial declaration is a document that provides information about income, assets, debts, and personal expenses.

The information in the financial declaration is used to analyze and determine questions of child support, alimony, division of marital property, and assigning responsibility for marital debts and obligations. as well as for determining an attorney’s fee or “for any other reason” (Utah Rules of Civil Procedure Rule 26.1(e)).

The specifics of what needs to be included in your financial declaration are outlined in URCP Rule 26.1. The acronym URCP means “Utah Rules of Civil Procedure,” and URCP 26.1 requires that you provide specific supporting documents with your financial declaration:

• Your previous two years’ personal and business tax returns, including all the documents submitted with your tax returns and all documents used to prepare those tax returns
• Pay stubs for the last 12 months before the petition for divorce was filed with the court.
• Documents that verify the value of all real estate that the parties have an interest in (for example, your most recent appraisal, tax valuation, and refinance documents)
• Bank statements for all financial accounts for the 3 months before the divorce was filed (this includes checking, savings, money market funds, certificates of deposit, brokerage, investment, retirement, regardless of whether the account has been closed including those held jointly, in your name, or as a trustee or guardian, or on someone’s behalf).

We also suggest that you provide documentation of your personal expenses going as far back as you can. If you don’t have this documentation, start compiling it.

2. Is there a way to be exempt from preparing and producing a financial declaration?

No. We will not discuss this topic again. You must prepare a financial declaration, and you must prepare it within the time limits you are given to prepare it. You must give your spouse a copy of it. There is no way around it. If you refuse to provide a financial declaration, the court can and almost surely will sanction you severely. Here is what Rule 26.1 provides on that subject:

(f) Sanctions. Failure to fully disclose all assets and income in the Financial Declaration and attachments may subject the non-disclosing party to sanctions under Rule 37 including an award of non-disclosed assets to the other party, attorney’s fees or other sanctions deemed appropriate by the court.

(g) Failure to comply. Failure of a party to comply with this rule does not preclude any other party from obtaining a default judgment, proceeding with the case, or seeking other relief from the court.

3. Do I have to give the court a copy of my financial declaration? Why?

You may be required to file a copy of your financial declaration with the court if 1) a hearing is scheduled on the subject of child support, spousal support, division of property, allocation of responsibility for debts, attorney fees awards and court costs, or 2) the court has ordered you to file it.

4. Do I have to give my spouse a copy of my financial declaration? Why?

Yes, you do need to give your spouse a copy of your financial declaration. It is required by court rules. Rule 26.1(c), to be exact.

But the better question is why wouldn’t you give your spouse a copy of your financial declaration? Exchanging financial declarations with your spouse is a way of keeping both parties honest about income, assets, debts and obligations, and personal expenses.

There is an element of wounded pride and embarrassment associated with close examination of the details of a person’s finances. Being honest and pushing your pride aside is hard but is still better than misrepresenting or hiding your financial state.

5. What will happen if I do not prepare and provide my spouse (and the court, when necessary or when ordered to do so) a financial declaration?

See paragraph 2 above.

And your attorney will likely withdraw as your counsel.

1. 1. You could be sanctioned for contempt of court. This can lead to fines, penalties, or even jail time.
   2. You could lose your rights and entitlements you would otherwise deserve when it comes to division of marital property, responsibility for marital debts and obligations, and the spousal support and child support awards.

6. Isn’t a financial declaration just busy work?

I hope that by now you can see that a financial declaration is plainly not busy work.

A clear, accurate, and complete financial declaration is one of the best ways to establish your honesty, character, and credibility overall.

A clear, accurate, and complete financial declaration is necessary to help you understand the reality of your financial situation now and what it will likely be post-divorce.

We get it. Taking a hard, honest look at your financials is scary and discouraging. But burying your head in the sand does you no good. Face up to it and get it done.

7. I do not see the point of a financial declaration (you are lying; of course you see the point of a financial declaration).
8. “Hey,” you may think, “I have a smart and original idea: I will lie on my financial declaration.” This is neither original nor smart.
9. 1. You are not the first and will not be the last person to believe that they can lie to your attorney, to the court and to your spouse and to your spouse’s attorney. People have been lying to the courts from the beginning. Sometimes it works. The odds, however, are against you.
   2. The moral thing to do is to tell the truth.
   3. If doing the right thing is not reason enough to be honest and forthright, then remember you are not as good a liar as you think, and you will be caught in your lies.
   4. Do you really believe that you are smarter than the opposing counsel, your attorney, and the court individually or combined? You can fool some of the people all of the time, all of the people some of the time, but you can’t fool all of the people all of the time.
   5. Lying can get you some big benefits if you get away with it. However, if you are caught lying, you will lose. The court can hold you in contempt, and even strike your pleadings outright and award default judgment to your spouse. If your main worry is your money, then you should disclose it. Getting caught in a lie or worse, lying under oath is usually more costly than being honest and forthcoming.
   6. Courts have seen liars lying on financial declarations forever. There is nothing new under the sun.
   7. Unless your lawyer is a crook, if you insist on lying on your financial declaration, your lawyer will be required to drop you as a client.

OK, so you’re now convinced there is no escaping the preparation of your complete and accurate financial declaration. How do I prepare my best financial declaration? Great question. Let’s start answering it by first addressing the wrong way to prepare a financial declaration.

9. The wrong way to prepare your financial declaration
   • Guessing or estimating without 1) making it clear on your financial declaration form that you were making an estimate, and 2) making the most accurate guess/estimate you can and explaining the bases for your estimate.

Your spouse isn’t likely to cut you some slack if you guess or estimate incorrectly. No, instead your spouse will accuse you of lying. Don’t make wild guesses. Don’t make estimates without making it clear that your estimate is an estimate, not an unquestionable fact.

Sloppy guessing and estimating makes you look dishonest and/or ignorant. Courts don’t listen to liars and fools or take them seriously.

1. Falsely claiming that you “don’t remember” and that you cannot find documents.

This is lying, and it doesn’t fool anyone. Anyone may honestly forget or misremember a few details. Sometimes documents get lost. It’s only human. But conveniently claiming “I don’t recall” and “I can’t find it” in response to crucial questions? Come on. You cannot even lie persuasively to yourself like that.

Claiming you can’t find documents doesn’t mean your spouse or your spouse’s lawyer can’t find them through other means.

10. The right way to prepare your financial declaration.
    • The right way to fill out a financial declaration is to be as honest and thorough as possible to provide as complete and accurate a financial declaration as possible. Yes, it may hurt or embarrass you to be so honest about your financial situation, but it hurts worse to lie and be sloppy.
    • Do the necessary work. You can’t skip steps and take shortcuts and turn out a complete and accurate financial declaration. If you think you are an exception, you’re lying to yourself.
    • Don’t procrastinate. You cannot prepare a good financial declaration by waiting until the last minute. Procrastination does more damage to your ability to prepare a good financial declaration than any other bad habit. Procrastination needlessly and inexcusably makes it sadly and much harder to prepare your financial declaration.
    • Conquer procrastination. Conquer it by:

• • • 1) committing to complete 3 pages per day, Monday, Tuesday, Wednesday, Thursday, and Friday. There are about 14 pages in a financial declaration form. Your attorney can prepare the first 2 pages for you. That leaves 11-12 pages you need to fill out yourself. If you complete 3 pages per day (and leave yourself an extra day or two to compensate for interruptions or snags you encounter along the way), you’ll have it done—and done well—in 5 days.

2) compiling your supporting documents. Start now. Make sure you contact your banks, credit unions, and other financial institutions, HR and/or payroll department, retirement benefits administrator, and credit card companies to get the documents you need to attach to your financial declaration:

• Tax returns for the last two years
• Pay stubs or other proof of income for the 12 months before the petition was filed
• Loan applications for the 12 months before the petition was filed
• Real estate documents. Deed, most recent appraisal, tax valuation, and refinance documents (if any).
• Financial statements for the 3 months before the petition was filed. This includes, but is not limited to:
  • checking
  • savings
  • credit cards
  • money transfer apps
  • money market funds
  • certificates of deposit
  • brokerage
  • investment
  • retirement

It can take several days for the documents to be emailed or mailed to you, so contact the sources and request them now. Don’t be afraid to follow up if you haven’t received them by the time the sources estimate or promise you’ll have them.

1. Garbage in, garbage out. If you wait until the last minute to prepare your financial declaration, odds are your financial declaration will be mediocre, and a mediocre financial declaration is dangerous. Frankly, if you prepare a half-baked financial declaration, you deserve the natural consequences of poor preparation.

iii. Work in and for your best interest.

1. Do the work. Do it consistently. Do it on time. There is no other way to do it right.
2. You cannot foist the preparation of a solid financial declaration on your attorney and his assistants. Really, you can’t. Don’t try. It won’t work. It cannot work.
3. Your attorney and his assistants cannot do it for you. It is impossible. There is information and there are supporting documents only you can provide.
4. Your attorney and his assistants do not know more about your financial situation than you do.

iii. Your attorney is there to help you get your financial declaration in ship shape, but you have to do the work and supply information and documents that only you can provide before your attorney can be of any help to you.

1. There is no loophole. There is no magic wand. You will have to do the work and do it consistently in order to put your best foot forward. Time wasted or squandered cannot be recovered.
2. Explaining each part of the financial declaration and what the court and the opposing party use it for:
3. Paragraph 1. Statement of whether you are filing a copy of your financial declaration with the court. This paragraph is fairly self-explanatory. Unless there is a hearing on the subject of alimony, child support, or attorney’s fees awards scheduled, or unless the court has ordered you to file your financial declaration with the court, you don’t file your financial declaration with the court.
4. Paragraph 2. The documents supporting your financial declaration. Your tax returns, pay stubs, loan applications, real estate documents, and financial statements verify the information you provide in the other paragraphs in your financial declaration.
5. Paragraph 3. Employment. You identify whether you are employed, and if you are, who your employer or employers are, how you are compensated, how often you are paid, and how much you are paid.
6. Paragraph 4. Gross Monthly Income. You identify all sources of your pre-tax income, whether earned or unearned, and how much you receive on a monthly basis from each income source. If you don’t receive income on a monthly basis, then you identify what the average annualized monthly amount is.
7. Paragraph 5. Monthly tax deductions. You identify what taxes are deducted from your gross monthly income and how much is deducted.
8. Paragraph 6. After Tax Income. This paragraph is fairly self-explanatory. In this paragraph you state what your net income is after you deduct the taxes withheld from your gross monthly income.
9. Paragraph 7. Monthly Expenses. This paragraph is fairly self-explanatory. Here you identify what your monthly personal expenses are. If you have separated and your expenses have changed since separation, then you identify the differences between your “Current” monthly personal expenses and what your previous “Marital” monthly personal expenses are.

You don’t simply state your personal expenses in paragraph 7. You need to be able to verify and justify them too. To do that, you need to provide receipts documenting these expenses as real.

Providing receipts establishes your credibility. They demonstrate that you are transparent and honest about your financial situation. Providing receipts establishes accuracy. They ensure that you do not overstate or understate your financial obligations and they prevent the court from dismissing your personal expense claims as false or inflated. Providing receipts provide context and explanations for specific expenditures.

8. Paragraph 8. Business Interests. A business could be a marital asset that has value to be divided in divorce. Or it could be separate property. This is why you provide the information about your business interests, who owns the business interests, and the value of business assets.
9. Paragraph 9. Financial Assets. This is where you identify where your money is kept, as well as information on other financial assets such as stocks and bonds, insurance policies, and retirement accounts.
10. Paragraph 10. Real Estate. This is where you identify your interests in real estate, such as the marital home, vacation property, rental properties, or other interests in real estate.
11. Paragraph 11. Personal Property. In this paragraph you identify the personal property that you own, whether you acquired it before marriage or during the marriage. Must you list every shirt and sock you own, every knife, fork, and spoon? No. A fair rule of thumb for what to list in paragraph 11 is that anything valued around $500 or more goes on the list. You can identify things worth less if you want or if you feel it is important, of course.
12. Paragraph 12. Debts Owed. In this paragraph you identify both your separate and marital debts and obligations. The type of debt, the account number (if applicable), who the debtors are, the balance owed on the debt, and what the minimum monthly payment is (if applicable).
13. Supporting documents for your financial declaration must be in PDF format.

The court will not accept documents in any form other than PDF, so all supporting documents must be in PDF form. Here are ways to scan and save documents as PDFs:

1. Scanner with built-in PDF-creation functionality. Most scanners come with built-in PDF-creation functionality, so you can scan a document and automatically save it in PDF format.
2. All-in-one multifunction machines: All-in-one machines often have scanning capabilities that allow you to scan documents to PDF files.
3. Smartphone Apps: There are several smartphone apps that enable you to convert a photograph of a document into PDF format. This is, however, the worst option of all the others. Scanning from a smartphone is time consuming, results in the lowest quality images, and makes it hard to scan multi-page documents. Use your own scanner or have someone else scan your documents into PDF format. You and your lawyer will be glad you did.

Once you gather your supporting documents together, save complete and legible copies of them in PDF format and then email them to your attorney to serve or file them with your financial declaration.

Thank you for watching. Thank you for reading. You’re better for having done so. Because you are now better educated and better prepared to complete your financial declaration fully, accurately, and on time. We hope that watching this video and reading the associated blog post has not only impressed upon you the importance of your financial declaration but has demystified what your financial declaration is and the purposes it serves. We hope you are better prepared and more confident going forward.

Utah Family Law, LC | divorceutah.com | 801-466-9277

November 15, 2023Tags: banks statements, court rules, financial declaration, how to, lying, supporting documents, taxes, URCP