What’s so important about financial declarations?

Posted Friday, October 12th, 2012 by Gregory Forman
Filed under Family Court Procedure, Of Interest to Family Court Litigants, South Carolina Specific

Financial declarations are often the most important piece of evidence in any family court case.  Filling them out and executing them in a cavalier manner is dangerous.

South Carolina Family Court Rule 20(a) mandates:

In any domestic relations action in which the financial condition of a party is relevant or is an issue to be considered by the court, a current financial declaration in the form prescribed by the Supreme Court shall be served and filed by all parties.

The form currently prescribed by the Supreme Court can be accessed here in Mircosoft Word format.

Family law attorneys and judges rely on these forms for almost every financial issue in family court.  Child support cannot be correctly determined without an accurate statement of income on page one, along with an accurate reflection of the children’s medical insurance and work related day care expenses.  Without a complete listing of assets and debts on pages three and four, an attorney cannot determine whether a property division proposal is reasonable, nor can the court make a just equitable distribution award.

The listing of income and expenses on pages one and two of the form will often be the primary factor in determining the size of any alimony award.  A party who is seen as deliberately understating income or overstating expenses is often very unhappy with the resulting alimony determination.

Finally the judge will look at the interplay of income, expenses, assets and debts to determine whether and how much attorney’s fees to award the prevailing party as ability to pay is a key component of attorney fee awards.

The family court often utilizes financial declarations in unexpected manners.  Woe be unto support obligors who claim they cannot afford to pay their alimony or child support but list boat payments, club dues, or large car payments on their financial declaration.  I have seen more than one man be incarcerated for being behind on support while making a $600 per month or greater car payment.  In alimony cases one party should rarely argue that the other party’s line-item expense is inflated if that party’s same line-item expense is similar (the exception occurs when one party’s financial declaration covers expenses for multiple people).

Because financial declarations are so vital to determining financial issues in family court, they are the first document I have a client work on once I am retained.  I don’t allow my clients to execute domestic agreements involving financial issues until they and the opposing party have exchanged executed financial declarations.  I rarely begin drafting any type of agreement until my client has provided me a financial declaration that I believe to be complete and accurate.  Too often when I have drafted an agreement–always at the client’s instance–prior the exchange of executed financial declarations, I have had to substantially redraft the document because the financial declarations reveal issues the client had forgotten to have me address.

A failure to exchange financial declarations prior to executing an agreement probably allows either party to repudiate the agreement up until the time they appear in court and obtain court approval of it.  The requirement of full financial disclosure is so axiomatic to the family court process that one has to go back almost three decades to locate a case, Kane v. Kane, 280 S.C. 479, 313 S.E.2d 327 (Ct. App. 1984), discussing financial disclosure as a necessary requirement for court approval of an agreement.

Because financial disclosure is required for court approval of an agreement involving financial issues, a refusal to make proper financial disclosure should be treated as a warning sign.  Opposing counsel who want to discuss financial issues without exchanging financial declarations are rebuffed.  My clients who refuse to provide financial declarations are asked to find other counsel.  On the other hand, because the Supreme Court has promulgate this financial declaration form, parties who repudiate an agreement after its execution will probably not be successful in arguing they did not receive adequate financial disclosure if they received an accurate financial declaration from the other party before they executed the agreement.

A complete and accurate financial declaration is the cornerstone of most family law work.  Failing to treat this document seriously is a serious mistake.

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