What Is a Financial Disclosure Statement?

A financial disclosure statement (FDS) provides a comprehensive overview of an individual’s financial situation, detailing income, assets, debts, and expenses. Its purpose is to promote transparency and accountability, ensuring all parties in a transaction or legal proceeding have access to accurate financial data.

Understanding When Disclosure is Required

Individuals must submit a financial disclosure statement in various situations requiring transparency. These include:
Divorce proceedings, to ensure equitable division of marital assets and liabilities, and to determine child support or alimony.
Public officials, elected or appointed, to prevent conflicts of interest and maintain public trust.
Substantial loan applications, such as large business loans or specific mortgages, requiring detailed financial information.
Bankruptcy proceedings, to provide courts with a complete picture of assets and debts.
Specific requirements and forms vary by jurisdiction or institution.

Components of a Financial Disclosure Statement

A financial disclosure statement systematically categorizes an individual’s financial information, providing a detailed snapshot.

Assets

The assets section includes everything of value owned, such as real estate, bank accounts, and investment portfolios. This category also covers other significant personal property, like vehicles, jewelry, and art. For accuracy, individuals should provide current valuations and supporting documentation, such as property deeds, recent bank and investment statements, or appraisal reports.

Liabilities

Liabilities constitute all money owed to others. This encompasses obligations like mortgages, car loans, credit card balances, student loans, and tax liabilities. List creditors, current outstanding balances, and any minimum payment requirements. Supporting documents, such as recent loan statements and credit reports, help to verify these figures.

Income

The income section details all sources of money received over a specific period. This includes wages, salaries, bonuses, commissions, and self-employment earnings. Other income streams, such as rental income, dividends, interest, Social Security benefits, or pension payments, are also included. Recent pay stubs, tax returns, and other income verification documents are typically required to substantiate reported income.

Expenses

The expenses section outlines regular expenditures. Common examples include housing costs like rent or mortgage payments, utilities, food, and transportation expenses. Insurance premiums, healthcare costs, and childcare or educational expenses also fall into this category. While detailed receipts are not always required for every expense, tracking expenditures for a period, such as six to twelve months, provides a realistic overview.

The Filing Process

After gathering and organizing necessary financial information, the next step involves submitting the completed financial disclosure statement. The individual must first obtain the correct forms, which are typically provided by the requesting entity, such as a court, government agency, or financial institution.

A thorough review of the completed statement for accuracy and completeness is essential before submission. Any errors or omissions can lead to delays or requests for clarification. Many entities now offer electronic submission portals, though mail or in-person delivery might also be options, often with specific requirements like notarization or the submission of multiple copies.

It is always advisable to retain copies of the submitted statement and all supporting documentation for personal records. After filing, the requesting entity will review the statement, and individuals should be prepared for potential follow-up questions or requests for additional information.