What is a Divorce Financial Statement?

A divorce financial statement is a form that lists all assets and liabilities of each person involved in the divorce. Each person must fill out their portion and submit it to the court to explain their financial situation to the court.

Divorce financial statements are used to handle splitting assets, as well as issues involving debt, property division, as well as both child and spousal support. That’s why you need a family law attorney during this process.

What are the types of Financial Statements required for Family Law cases?

• Short Form financial statement,
• And Long Form Financial Statement

What exactly is a short-form financial statement?

When a parent seeks to establish or modify child support, they must submit a Short Form Financial Statement. To determine child support using the Maryland Child Support Guidelines, parents need to provide the information requested on the Short Form Financial Statement.

In Maryland, parents must use the Child Support Guidelines to calculate child support. If their combined monthly income is less than $30,000 (or $360,000 per year), they should file the Short Form. The Short Form Financial Statement requires exact and specific information.

What is a financial statement’s long form?

The main distinction between Short Form and Long Form Financial Statements is the goal. A Long Form is required when a party wants to establish or amend alimony or when the parent’s monthly income exceeds the Child Support Guidelines ceiling of $30,000 (or $360,000 annual report).

What are the information requirements in Short Financial Statements?

Short Financial Statement is straightforward to prepare since it only requires the following information:

• Monthly gross salary from all sources
• Information about the monthly health insurance premiums for young children
• Childcare costs tied to the job
• Unusually high monthly medical costs;
• Monthly costs for education
• Monthly costs for transportation.

Clients must be willing to sign the Short Form under oath and be ready to offer counsel, the Court, and any necessary supporting evidence for all the figures reported. This financial report must be submitted with the initial complaint or response to the Court.

What are the Three sections in the Long Form of a Financial Statement?

• Monthly Expenses, 
• Income Statement, 
• and Assets and Liabilities

What information must clients include about the costs for themselves and their dependents when detailing their monthly expenses?

• Housing costs, including rent, mortgages, insurance, and utility costs
• Medical, psychological, and dental costs
• School expenditures
• Expenses for recreation and enjoyment (vacations, club membership fees, camps, extracurricular activities
• The cost of transportation
• Clothing, incidentals, gifts, and any appropriate ancillary costs.

The information must include clients for the income section:

• Gross monthly wages;
• Net income from wages;
• Net income from other sources; and
• Total monthly income.

Clients must include information for assets and liabilities.

• Real estate holdings, bank and savings accounts, equities, investments, automobiles, and personal property are examples of valuable assets.
• Mortgages, car loans, bank loans, accumulated taxes, and credit card account balances are examples of liabilities.

The Long Form should accurately represent a client’s financial status, and the client must back up any claims made with supporting information. It is not intended as a wish list to obtain increased alimony or child support.

Why is it important to make sure you account for all income and expenses?

Filing an accurate divorce financial statement means you must file the gross payroll amount. This can be found on your pay stubs because it is your before-tax gross income. If you have a day job, a side business, bonuses, rental income, or reimbursed business expenses, you must include these.. 

Be sure to report business and personal expenses on different sides of the statement. If you make mistakes, they may be seen as intentional, making you look very bad in the eyes of the judge.

Reminder: What Your Financial Statement Reveals About You to the Court

The court utilizes this formal record to ascertain your pre-filing financial position. Please do not rush through it without focusing on the details. To better understand it, you can get guidance from your attorney.

• How much child support should you provide?

Tell the truth so the judge can order the appropriate assistance for your claim. In Maryland, child support is calculated depending on some variables, including parental income and the child’s total requirements. The court wants to ensure that the child has a comparable level of life in both homes.

• How Much Spousal Support Should You Get

Also known as alimony, this may be ordered for a certain time throughout the divorce process or after to provide one spouse time to establish their financial stability. The information in your financial statement gives the court some foundational information it employs in this regard. Courts consider the spouses’ spending patterns, age or health, length of the marriage, and earning capacity.

How to Make Your Financial Statement Complete and Accurate?

Here are some pointers to help you correctly fill out your divorce financial statements and appropriately list your assets and income during the divorce.

Never estimate your monthly expenses.

Everything needs to be precise when it comes to divorce. You can even consider paying someone to help you analyze bank statements to determine your spending. At the very least, you should have done this for the previous three years, as this will give you a realistic sense of your monthly spending.

Ensure that every income is recorded.

You must include the gross payroll amount in your divorce financial statement to make an appropriate filing. Because it represents your gross income before taxes, you can find this information on your pay stubs. You must include any bonuses, rental revenue, or reimbursed business expenses if you have a day job and a side business.

Ensure you separately list your personal and commercial spending on each side of the statement. If you make mistakes, the judge might assume you did so on purpose, giving you a wrong impression.

Assets should be reported at fair market value.

When it comes to your assets, be sure never to estimate. You may require a professional appraiser to determine the actual value of your property or vehicle, as online services might not be able to provide such information. Additionally, knowing the value of your property will inspire confidence in you.

Ensure that all of the assets and obligations are taken into account.

Include your income, investment, revenues, and expenses on the divorce financial statement if you have already disclosed them on your tax returns. Some tax-free or deferred assets must be disclosed on your divorce financial statement, even though they should not be included in your tax return. Include any obligations, debts, and sums borrowed from friends and family.

Update your financial statement.

Divorce is a challenging and drawn-out process. As time passes, you might need to update and amend your financial statement to reflect changes in your address, home sale, or other life events. Maintain timely financial statement updates.

What happens if you divorce without a financial order?

Both parties can continue to file financial claims against each other until the Court issues a financial order or the basic financial statements are obtained. This means that the claims will remain ‘active’ regardless of how much time has passed.

What happens if you fail to complete your financial statement accurately?

You might only get the financial help you need if your financial statement is correctly completed. Additionally, it can open you to attack from the opposing side during cross-examination at a trial or deposition.

Accurately completing a Financial Statement can be stressful and difficult for many people. The Divorce With A Plan team is ready to assist you in navigating these challenging circumstances. A family law attorney has the experience and will be able to file paperwork for you. If you are going through the separation process, the Divorce With A Plan Team can help. 

We specialize in divorces and can document your divorce financial statements for you. Speak with a divorce attorney today to schedule a consultation.