The financial statement is the cornerstone of every divorce or paternity action. Judges use the information to calculate support payments and divide the marital estate. Here are some common mistakes or oversights made by attorneys and pro se litigants alike.
DO NOT underestimate its importance
When negotiating or arguing over the division of the marital assets or child support and alimony, the parties’ financial statement will be the primary sword and shield for each side. The information provided is under oath, meaning that you are swearing to the accuracy of the information you provide as being complete and correct. Not only would providing the wrong information possibly be perjury, but it would destroy your credibility in the eyes of the court.
DO NOT complete the form in court on the day of your hearing
Filling out a financial statement takes time. It takes research. You need to be able to document as much as possible, including with paystubs, tax returns, receipts, bills, deeds, titles, etc. This cannot be done on the day of the hearing. You will likely be completing several financial statements, providing updates for each court appearance (including motions for temporary orders, the pretrial hearing, trial, and at the request of the other party). Consistency and accuracy assure that your credibility remains in tact. Filling a statement at the courthouse indicates to the court that you are not prepared and are not taking the proceedings seriously, which also hurts your credibility even if you are able to provide accurate information. Give yourself enough time to do it right each and every time.
DO NOT double dip
This is especially true for self-employed parties who work out of their home or share home expenses with their business expenses in some other way. If you have expenses listed on a Schedule (see below), for example, you cannot also list that expense as part of your personal weekly expenses. This is a clue to the court that you are either sloppy or dishonest, either of which will hurt your credibility. Great care must be taken in this respect.
DO use the correct form
If you earn less than $75,000.00, use the Short Form, and if you earn more, use the Long Form. Even when using the Short Form, be sure to refer to the lists provided in the long form regarding expenses and assets, as they might refresh your memory as to some items that you may overlook when using the Short Form. Links to user-fillable forms are provided for each at the end of this Guide, as the court prefers the forms to be typed.
DO use pink paper
The court requires financial statements to be printed on pink paper so they can easily be identified. Financial statements are kept separate from the main file, which is available to the public, for privacy concerns. Only the parties, their attorneys, and court staff have access to the financial statements. Be sure to use pink paper.
DO list all sources of income
Income to be reported on the financial statement is more broad than the income you report to the IRS. You must list all income, whether taxable or not. A link to IRS Publication 525 is provided at the end of this guide for more information on the distinction between taxable and non-taxable income.
DO provide estimates where appropriate
If you do not have access to information, perhaps because documentation is in the possession of the other party, then you may provide estimates. Estimates are also good for those weekly expenses, such as food, entertainment, etc. Indicate in a footnote which answers are estimates, but over time you should be keeping track of these costs for future financial statements, or even your initial one if you haven’t filed your complaint yet. The more accurate these numbers, the more fair the support order and property division will be for both sides.
DO provide weekly information
A common mistake, especially for pro se litigants, is to provide income based upon their bi-weekly pay stubs. The form requests WEEKLY income and expenses, so you will have to calculate your weekly income and deductions based upon the information in your paystub. Instead of simply dividing by 2, the better practice is to multiply the bi-weekly income by 26, and then divide by 52. For monthly payments, instead of dividing by 4 (or 4.3), multiply by 12 and then divide by 52. The practice is to calculate the annual income, then divide by 52. This is the most accurate method of determining weekly income or expenses.
DO provide averages for seasonal or self-employed income
If your income fluctuates throughout the year, or if you are self-employed and do not receive a pay stub, the courts will accept an average of your yearly income based upon prior years’ annual income and tax figures (at least the past 3, but no more than 5 years).
DO attach the appropriate schedules
If you are self-employed, your income information will be provided in the Schedule A attachment (a link to a user-fillable form is provided at the end of this Guide). Use the Schedule C from your tax return to provide the information needed. If you have property you rent out as a source of income, use Schedule B of the financial statement (a link to a user-fillable form is provided at the end of this Guide). Similarly, you can use the information from Schedule E of your tax return to fill out the information needed.
DO consult an attorney
If you feel stuck or overwhelmed for any reason, consult an attorney. In this economy many people are representing themselves trying to save some money, which could ultimately be lost if the financial statement is not completed properly. This form is crucial to your case, and cutting corners could result in unfair orders that could cost you much more than you would have paid an experienced lawyer who knows how to complete the form and use the information to effectively advocate for your interests.
DO attach pages
You are not limited to the information sought on the forms. It is your obligation to list every source of income, every expense, every asset, and every liability to which you or your spouse may claim a right. This includes inheritances, boats, retirement plans, stocks, promissory notes, savings bonds, whole life insurance, jewelry, and business interests. Just because the form does not request a certain category does not relieve you of your obligation of complete disclosure. Attach pages and refer to the attachments on the form.
DO consult experts
Appraisers and actuaries are often required for the valuation of assets that are not easily ascertainable, such as real estate, fine art, pensions, etc. If you are under time limitations, try searching online to identify the value of the item in question, and state on your financial statement the source of the valuation until such time that an appraisal can be performed.
We hope this Guide has answered some questions, and has at least made an impression upon you that the Financial Statement is extremely crucial to your case. If you have any questions, please consult Reade & Reade for assistance.