Young businesswoman accountant working in the office

This was a surprising change – in modern times, it seems there has been an irreversible trend towards more bureaucracy, paperwork, and in the family law arena, more disclosure. Ever since the Colorado Supreme Court promulgated the new Colo. R. Civ. P. 16.2 back in 2004, exhaustive financial disclosures have been the rule, not the exception, even for the simplest of cases. We wrote a blog post a couple years back highlighting how the financial disclosures were mandatory in all cases involving financial issues, even if the parties themselves did not believe they needed the disclosures.

And there are good reasons for requiring disclosures – it prevents one spouse with intimate knowledge of the parties’ finances to play “hide the ball” and simply fail to disclose an asset, or one spouse from intimidating the other to accept his sworn financial statement at face value without ever seeing the underlying financial institution statements to verify it.

But this additional disclosure requirement has a cost, in that it adds both time and money to the average dissolution of marriage case, causing the mandatory disclosure requirement to be the bane of spouses in short-term marriages with no meaningful assets or debts to wrangle over.

Option for Simplified Financial Disclosures

This month, the Colorado Supreme Court stepped in to provide relief for spouses with those simpler cases with changes to Rule 16.2 (the redlined changes to that rule start on p.4 of the document). By agreement of both parties, in certain, simpler cases they can waive the requirement to provide financial documents, and provide just their sworn financial statements.

When Simplified Disclosures Are Applicable

Per the new Colo. R. Civ. P. 16.2(11)(a), in order to use simplified disclosures both parties must affirm that all of the following conditions are met:

  1. Limited disclosures will not cause either of them hardships.
  2. There are no children and no party is pregnant.
  3. Neither party is seeking spousal maintenance (aka “alimony”).
  4. The net equity in all marital assets combined, other than the marital residence, is under $100,000.
  5. Their combined debt, other than the mortgage, is under $50,000.
  6. Neither party has separate property worth over $10,000, or a pension or trust.

Procedure for Simplified Disclosures

Within 42 days of service of a petition for dissolution or a post-decree motion involving financial matters, each party may sign and submit a JDF 1372 – Affidavit in Support of Waiver of Mandatory Financial Disclosures in Domestic Relations Cases (MS Word).

Note that they still have to file their JDF 1111 – Sworn Financial Statement by that same 42-day deadline, an agreement to simplify disclosures just saves providing the pay stubs, tax returns, bank statements, and other financial documents.

Rejection of Financial Disclosure Waiver

Although no court approval is required for the parties to waive their financial disclosures, there are two circumstances in Rule 16.2(11)(c) where they can still be required, even if the spouses meet all of the criteria and have submitted their affidavits:

Upon either the court rejecting the waiver, or one party withdrawing consent, both parties then have 28 days to provide the other with their full financial disclosures and then file a JDF 1104 – Certificate of Compliance with Mandatory Financial Disclosures confirming to the court that they have done so.

Concerns with Simplified Financial Disclosures

For certain divorce cases where two spouses truly have no meaningful assets, and no children, this rule change will be welcome. One of the common questions any family law attorney gets asked is “We agree on everything. Do we still have to exchange financial documents.” Well, now the answer to that is “Maybe not”.

But this rule change was somewhat of a surprise, even to those of us who follow family law developments in Colorado. It appears to have been promulgated with little fanfare, whereas more publicized proposed changes receive a lot more input from lawyers (who are great at posing the tricky hypotheticals to help close loopholes). So now some practitioners have raised those concerns after-the-fact. Among them are:

Timing Problems with Waiver vs Sworn Financial Statement (SFS)

Until you know that your spouse is claiming for assets and debts, it may be impossible to know whether a waiver of disclosures is appropriate, or even permitted under this rule. Yet the JDF 1372 waiver form is supposed to be submitted by the same 42-day deadline as the SFS. Logically, there would be a couple week grace period after seeing the other side’s SFS before either (1) the waiver, or (2) the underlying financial statements are due.

This rule change presumably requires both spouses to cooperate fully and discuss whether they want the waiver in advance. Otherwise, for example, if no waivers are filed by day 42, each spouse is technically required to provide full disclosures regardless. So practically speaking, the waivers should be signed and filed well before the 42-day deadline for financial disclosures to obviate the need to get everything ready “just in case.”

What is a Pension??

Although not as common as they once were, public employees are still typically covered by a “defined benefit pension” which pays a monthly amount after retirement based upon years of employment and salary. But unlike an IRA or 401(k), these pensions are typically not accounts with an ascertainable cash value. For more information about such pensions, see our Dividing Retirement Accounts article in the Colorado Family Law Guide.

Examples of public employees with pensions include:

  • Military (“Blended” or “Legacy” defined benefit pension which vests at 20 years of service)
  • Federal civilian employees (FERS)
  • State or local employees (PERA)

Many times a pension may be “out of sight, out of mind”. A military member may not think her pension exists until 20 years (whereas a military retirement is divisible at divorce in Colorado, even before it vests). Or a public employee may think that the SFS only means those retirement accounts which have a current value, such as a 401(k).

So spouses may agree to simplified disclosures without realizing they are not eligible. And if they don’t disclose the pension on their SFS, the system will fail the non-employee spouse’s rights to the pension unless the judge is really paying attention and looks to see whether either spouse works for the government, and therefore almost necessarily has a pension which disqualifies them from this simplified disclosure option.

Business Interests

Business interests are not addressed at all in the rule. But often they may be a valuable asset which neither spouse is thinking of. When one spouse is self-employed, there is always the potential that his/her business has value, which is then a divisible asset requiring a CPA to appraise.

And this is no mere technical detail – I’ve had several real-world cases where one spouse is a physician and partner in a medical practice, and does not list the practice as having any value. Upon rolling up our sleeves and delving into the financial records, we realize a CPA is needed, and in two of those cases the business which one spouse completely omitted was actually worth more than $1m!!

Last-Minute Withdrawal of Consent

Man in Suit Ripping up Contract

Note that the rule allows a party to withdraw consent and require the full financial disclosures at any time. Without some kind of time limit, this would enable a spouse to delay proceedings by first agreeing to simplified disclosures, then just before the hearing is set, withdraw consent at the last minute, triggering the 28-day deadline to file the disclosures and potentially delaying the trial.

Presumably a judge could enter a tighter deadline to prevent this kind of game-playing, but such authority is not readily apparent from the rule.


If you have no kids, but your case has enough assets to divide that it’s worth hiring a lawyer, this rule change probably won’t affect you, since your assets probably exceed the limit for limited disclosures anyway.

But omitted assets, particularly pension or business interests, are a very real and likely concern. And that means the potential for a spouse to either be taken advantage of when those assets are not divided, or to find out after dissolution there were undisclosed assets, and then seek to reopen the case to divide them.

The intention of this rule is sound, and cutting the onerous disclosure requirements in basic cases with no assets is certainly warranted. But this rule change appears rushed, and does not contain a practical timeline for disclosure vs the waiver, or to verify that there are no disqualifying assets. Beefing up the waiver form may help – e.g. require a spouse to identify whether they are, or ever have been, a government employee, or whether they are self-employed. At a minimum, that may trigger a court to insist on full disclosures to protect the other spouse.

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