By Carolyn Torres-Mabe. The Domestic Relations Financial Affidavit (“DRFA”) is the central financial document used in domestic cases including divorce, child support modifications, child custody modifications, legitimations, and contempt cases.
It is an overview of one person’s financial picture and sets forth his/her assets, debts, and monthly expenses. DRFAs are required to be notarized and must be exchanged prior to mediations and court. It is essential that the DRFA is accurate because it is a sworn statement and is often used to determine major issues such as income, monthly financial needs, and the division of assets and debts.
Completing a DRFA can be daunting and time-consuming, but the effort is necessary. There are several areas in which common mistakes are made. Consider the following examples:
- Net monthly income must be calculated by subtracting just taxes from gross income. Other deductions such as insurance or retirement contributions are not considered in determining net monthly income.
- It is important to note what part of an asset is separate and why so to reduce conflict in negotiations.
- An account should be listed by noting the last 4 digits of the account number, the exact balance, and the date of that balance.
- When valuing non-account assets, note where you found the value (such as Zillow.com, Blue Book, etc.) and any debt tied to the asset. Remember equity is the asset and is defined by value less debt.
- Some monthly expenses are easy to find, such as a mortgage payment. Others are harder to approximate. It’s usually best to use a twelve month average.
- It is easy to forget that the DRFA is based on monthly expenses People often include what the pay for an entire year of car registration costs rather than divide by twelve. Also, some extracurricular activities are by season, so the breakdown to the monthly amount must be made.
- People often forget small expenses they incur such as dry cleaning, pet expenses, and recreational costs. The DRFA is only accurate if it captures all monthly expenses.
- The debt section should include the financial institution holding the debt, the last 4 digits of the account number, the total balance due, the monthly payments being made (not necessarily just the minimum payment due), and whose name is on the account.
An incomplete or inaccurate DRFA not only leads to confusion and can stall negotiations, but can also distort what the actual finances are. For that reason, it is key that you take your time to create an accurate DRFA so that your negotiations and decisions are informed and thoughtful.
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