The financial statement is perhaps the most important document a party files with the court in a family law case. A financial statement must be filed with the court where support (either child support and/or alimony) or money is an issue in the case. The purpose of the financial statement is to provide the court and the other party with detailed information regarding your income, expenses, assets, and liabilities. Despite its importance, parties often do not even know that they are required to complete a financial statement, do not understand the financial statement, or do not complete the financial statement properly.
The first step is determining which financial statement you actually need to complete. If your annual income is less than $75,000, you should complete the short form. If your annual income is $75,000 or more, you need to complete the long form. The difference between the short form and the long form financial statement is the amount of detail that is required, particularly with respect to expenses and assets, with the long form requiring more detail than the short form.
At the top of the page, you must fill in the division (that is, the county in which your case is pending), docket number, and names of the Plaintiff and Defendant. If you have brought the case, you are the Plaintiff. If you are the person against whom the case is brought, you are the Defendant.
The first section of the financial statement includes your personal identifying information, including your name, social security number, address, telephone number, date of birth, number of children living with you, employment information, and health insurance information. For security reasons, you should only provide the last four digits of your social security number on the financial statement.
The next section of the financial statement requires you to provide all of your gross income. Income means your gross income (that is, before withholdings or other deductions), regardless of the source of the income and regardless of whether the income is reportable for income tax purposes or not.
The next sections of the financial statement require you to provide all of your deductions from gross income. These sections require you to set forth any deductions for federal and state income tax, social security and Medicare taxes, medical insurance (and dental and/or vision insurance if you have it), life insurance, union dues, retirement contributions, and any other type of deductions that are automatically taken from your pay each pay period.
An often overlooked aspect of the financial statement is that you are required to provide the amount of your gross annual income from the previous year and also attach a copy of your W-2 and 1099 forms, if you received any, from the previous year. So, come prepared to court with copies of these documents in hand.
Next, you must set forth your expenses. If you have already listed deductions for items such as medical insurance or life insurance under the deductions section because they are automatically deducted from your income each pay period, do not also include those deductions under the expenses section.
You will note that the sections for income, withholdings, and expenses ask you to set forth weekly amounts. Although most people do not calculate their expenses on a weekly basis, you must convert the numbers to a weekly amount as required by the form. If you know the annual amount, divide by 52 to get the weekly amount; if you know the monthly amount, divide by 4.3 to get the weekly amount (do not divide the monthly amount by 4, as you will get an inaccurate result). For expenses that vary greatly over the course of a year (for example, heating expenses), you should determine the total amount that you spend on heat in one year, then divide by 52 to get the average weekly amount.
You are next asked to set forth all of your assets. Assets include all property which you own, either individually or with somebody else, whether or not that person is your spouse. For various types of assets, you are asked to provide your account number. For security reasons, you should only provide the last four digits of the account number.
You must set forth all of your income, deductions, expenses, and assets, even if they do not fit into one of the predetermined categories set forth on the financial statement. If you have income, deductions, expenses, or assets that do not fall into one of the categories on the form, list the income, deduction, expense, or asset under “other” in the appropriate section and give a brief explanation of the income, deduction, expense, or asset. Just because the source of the income, deduction, expense, or asset is not listed as one of the categories on the form, that is not an excuse for not including it on your financial statement.
The next section requires you to list your liabilities. Liabilities include all outstanding debts you owe, such as credit cards, student loans, medical bills, and loans from friends and/or family members. You must list all liabilities, whether or not you are currently making payments to pay down the debt. Take the time to locate the most recent statement you have received from the creditor, so that your financial statement reflects the current amount due.
There are additional schedules that must be completed if a party is self-employed (Schedule A) or if the party owns rental property (Schedule B). You may not include depreciation as either a business or rental expense. These schedules are the same for both the short form and the long form financial statements. Essentially, you are required to set forth your gross receipts and expenses (on a monthly basis for self-employment or a business and on an annual basis for rental property), which results in the calculation of weekly business or rental income.
Last, but certainly not least, a party must sign his or her financial statement under the penalty of perjury. This means that if you willfully misrepresent information in your financial statement, you may be subject to having criminal charges filed against you. Falsifying information on your financial statement is just not worth the risk – so, be honest! If you are represented by an attorney, the attorney must also sign the financial statement, stating that she or he has no knowledge that any of the information contained within the financial statement is false. At the beginning of a hearing before the judge, the clerk will swear you in – remember, you have sworn to tell the truth. If the judge is approving an agreement, the judge will ask you whether you have disclosed all of your income, expenses, assets, and liabilities on your financial statement, and you must answer verbally on the record, which is recorded.
It is certainly worth the effort to take your time in completing the financial statement to make sure that it is accurate and complete. Although it may look overwhelming at first, if you complete it section by section, it can be a lot less daunting. Again, I cannot overemphasize enough how important the financial statement is in your family law case!