Financial Disclosure

Financial disclosure is one of the most important things a court looks at in determining whether a prenup is valid. The idea is that a spouse cannot intelligently make decisions about the financial aspects of a marriage without knowing the financial situation of their partner. If you omit to disclose some of your assets, this can be grounds for invalidating your prenuptial agreement later on. As well, if you do not properly disclose something (e.g. only disclose your reported income to the IRS rather than your full income), this can also be grounds for invalidating your prenup.

Typically, financial statements for each party are attached to the prenuptial agreement as schedules. So, for instance, Schedule “A” of the prenup will contain the husband’s income, assets, and liabilities as of the date of the agreement, and Schedule “B” of the prenup will contain the wife’s income, assets, and liabilities as of the date of the agreement. It is really important that these schedules be as accurate as possible, and that both partners are satisfied about the accuracy of each other’s schedule. This can include looking at each other’s bank statements and other financial documents if necessary.

It is also prudent of you to keep financial statements from all of your accounts, for the date of the agreement. This is in case the truth or accuracy of your financial statement is challenged in the future.

Note that *everything* must be disclosed about your financial situation. This mean everything. It does not mean everything you own in the US, but not overseas. It does not mean that you can omit the property or bank account you own for your parents but really consider to be theirs. Everything, everything, everything.

Below is a worksheet for gathering the information you need to prepare your financial statement. Note that it just lists the basics. If you expect your financial situation to change in the near future, that should also be disclosed. If you expect to receive large gifts or inheritances, that should also be disclosed, even if you do not know the specifics (e.g. if you will be inheriting the bulk of Bill Gates’ assets, that does make a difference). Basically, you should disclose as much information about your financial situation to your partner. When it comes to prenups, you can never disclose too much financial information.

Financial Worksheet for a Prenup

YOUR ASSETS AND LIABILITIES

Real estate (address, estimated value, amount of mortgage)?

Trusts (description of interest and value)?

Stocks (description and value)?

Bonds (description and value)?

Pension plans and retirement plans (description and value)?

Business (name, percentage ownership, brief description of operations, value)?

Life insurance (type, amount, designated beneficiary)?

Cash (name of bank and address, amount)?

Boats, cars, planes (description and value)?

Furnishing, art and paintings (description and value)?

Other assets (description and value)?

Debts (description and amount)?

Income from all sources (description and amount)?

YOUR PARTNER’S ASSETS AND LIABILITIES