Don't Lie Or Exaggerate On Your Statement Of Net Worth

Nearly every matrimonial client completes the Statement Of Net Worth ("SNW"). This document is a cornerstone and the first piece of assembling financial information for the future resolution or litigation of all divorce cases, even if they are uncontested. This document is critically important to the identification of separate property, marital property and will be used to negotiate temporary child support and temporary spousal support even though there is a formula to aid in those determinations.

The SNW is "sworn to" and thus if the listing of assets, debts and expenses are obviously false or incomplete issues of credibility will arise when the Judge reviews this document. On the other hand reasonable estimates of expenses and the value of assets and amount of debts are good enough. If an account is worth $35,000 and is listed on the SNW as $34,000 there is really no problem as it is in the "ballpark" on the other hand if the account is omitted or the value is stated as $10,000 that would be troubling.

Likewise, when a person lists their monthly expenses there is nothing wrong and in fact it is encouraged to list as much as possible. The key is to utilize a monthly amount that can reasonably be explained if called into question. So an expense that does not occur monthly but annually is $1,200 should be listed as $100 per month. When I review my client's draft of the SNW or when I review the SNW sent to me by opposing counsel I utilize my life experience and consider the parties' assets and income to determine if I think the expenses are in the normal range. For example, if a family has joint income of $100,000 and I see that the children's birthday party expenses are listed as $1,000/mos I highly doubt that the number is correct. Perhaps it is the annual amount and just needs to be divided by 12, but it would be highly unlikely that the family actually spends $12,000/year which would be the amount based upon $1,000 per month.

If a person is a stay at home parent and lists dry cleaning as $100/mos and gasoline at $400 per month and vacations at $700 per month with joint income of $100,000 those expenses are most likely exaggerated. While there are many families where the expenses exceed their income and overspending is possible I then look to see how much debt the parties have or whether they have access to other income or support.

Credibility is so important during divorce litigation because if the judge thinks that the client is falsifying information, deliberately hiding assets or engaging in other clearly deceptive actions the judge will be less inclined to believe anything that person says. There is a concern that if you lie about small things, you probably lie about big things as well. Further, when the other attorney reviews the documents from the opposing party they will also assess credibility and determine how much digging is necessary prior to resolving the case.

So it is good advice to take your time and complete the SNW reasonably accurately and completely and avoid more costly legal proceedings.