Equalization of the parties' Net Family Properties applies only to married spouses.
Each spouse must prepare a sworn Financial Statement listing all assets and liabilities as of the date of marriage, the date of separation and the current date. The lawyer for each party will calculate each party's Net Family Property which is essentially their net worth on the date of separation minus the party's net worth on the date of marriage. Certain assets owned on the date of separation may be excluded from a party's Net Family Property, such as a gift from a third party or an inheritance received during the marriage.
Equalization of Net Family Property occurs whereby the party with the greater Net Family Property pays the party with the lesser Net Family Property one-half the difference between the two parties' Net Family Properties.
If the parties own joint assets that are to be kept by one party, the party that seeks to keep the joint asset is generally required to buy out the other party's one-half interest in the joint asset at fair market value. Generally, any such buy-outs occur after the parties' Net Family Property has been calculated and the buy-out amount is added or subtracted from the Net Family Property equalization amount.
It is the obligation of each party to provide full and frank disclosure of the party's income, expenses, assets and liabilities. This information is set out in a Financial Statement, which is a sworn statement under oath. A Financial Statement is required in almost all court proceedings. You do not have to file a Financial Statement with the court in the following instances:
There are no claims for support or property;
You are seeking child support from another person in accordance with the Table amount of the Child Support Guidelines; or
Both parties to a Motion to Change on Consent file have agreed that there is no need to file Financial Statements.
Negotiations of Separation Agreements cannot be finalized unless both parties have exchanged their respective Financial Statements. It is important that the parties accurately prepare and exchange Financial Statements at the early stages of negotiating a Separation Agreement. Your lawyer requires the full financial disclosure of both you and your spouse in order to properly advise you of your rights and obligations.