The Critical Role of Accuracy in Your Financial Statement

Divorce doesn’t only end the marital relationship — it also addresses the economic aspects of your marriage. One way the court gathers information to make fair decisions about the financial matters that need to be decided in divorce is by requiring each spouse to submit a detailed financial statement. If you are tasked with completing a financial statement in a Maryland divorce it is crucial that the statement be complete and accurate to ensure an equitable distribution of marital property and avoid any unintended financial consequences in your case.

What is a Financial Statement in Divorce?

A financial statement is a detailed document that each spouse must submit in a Maryland divorce. It is meant to ensure transparency and provide the judge with a clear picture of each spouse’s income, expenses, assets, and liabilities, so that a fair decision can be rendered regarding child support, alimony, and property division. Notably, this form is not optional — it is a legal requirement in every case where child support, alimony, or attorney’s fees are at issue.

There are two versions of the financial statement: the long form and the short form. While the long form version has six pages and requires much more detail about monthly expenses and income, the short form (used for child support cases under a certain income threshold) only contains two pages. Specifically, the long form is required when an initial request for spousal support is made, or in cases involving a spousal support modification. The parties must also complete the long form if child support is requested, and the combined income of the parties exceeds $30,000 per month.

What Information Should Be Included in Your Financial Statement?

The short form financial statement is used when child support is the primary issue that must be determined and the combined household income is less than $30,000 per month. It is typically straightforward since it only requires you to disclose gross monthly income, child-only health insurance premium information, work-related childcare expenses, extraordinary medical expenses, monthly school expenses, and transportation costs for access and between the parent’s homes.

The long form financial statement requires much more detail. You must include information about your monthly gross income from all sources, including the deductions taken out for taxes and retirement. You must also document information regarding your monthly expenses:

• Residence — All costs in connection with your primary and secondary residence must be disclosed on the financial statement. This includes expenses incurred for mortgage or rent payments, homeowner’s insurance, taxes, gas and electric, heat, water, repairs, lawn care, carpet cleaning, painting, and more. You must also list costs of trash removal, telephone bills, domestic assistance, replacement furnishings, appliances, and any condominium fees.
• Household necessities — In this portion of the financial statement, you are required to document the costs of food, household supplies, drug store items, and other household necessities.
• Medical and dental costs — A financial statement requires you to list medical and dental costs incurred by both you and your children. This includes expenses for health insurance, therapy, dental care, glasses, and extraordinary medical care.
• School expenses — School expenses must be disclosed on a financial statement, including the costs of tuition, books, lunch, extracurricular activities, uniforms, clothing, and daycare or nursery school.
• Recreation and entertainment — You must provide the court with a detailed breakdown of the costs incurred in connection with vacations, videos, theater, dining at restaurants, cable TV and internet, camp, lessons, memberships, and other extracurricular activities.
• Transportation — The long form requires you to disclose details regarding any car payments, repairs, auto insurance, parking fees, and public transportation costs.
• Gifts — Holiday and birthday gifts must be disclosed on the long form, as well as charitable donations.
• Clothing — The costs of clothing purchases, laundry, alterations, and dry cleaning must be listed on the financial statement.
• Incidentals — The form accounts for incidentals, such as books, magazines, newspapers, stamps, and banking expenses incurred on a monthly basis.
• Miscellaneous — Other miscellaneous expenses must be included on the long form financial statement, such as alimony or child support from a previous order, religious contributions, haircuts, manicures, life insurance, and expenses related to pets.

Other information that must be disclosed on a long form financial statement in a Maryland divorce includes assets and liabilities. Assets can include real estate, bank accounts, furniture, stocks, personal property, jewelry, vehicles, and other marital property. Liabilities may include bank loans, mortgages, automobiles, notes payable to relatives, and credit card debt.

Depending on the specific financial issues in your case, you may be required to provide supporting financial documentation, appraisals, or professional valuations. Your attorney can best advise regarding the information you will need.

Why is Accuracy Important in a Financial Statement in a Maryland Divorce?

The financial statement in a Maryland divorce is highly detailed and can take a considerable amount of time to complete. It’s important to be accurate when filling out a financial statement and not to rush through completing it — the court will use the information in this document to determine your financial position.

Failure to complete the form accurately can result in costly consequences. Not only might you not receive the relief you’ve requested, but you may also leave yourself open to attack by your spouse during a deposition. In addition, an incorrect financial statement can impact your credibility in the eyes of the court and drive up the costs of divorce proceedings. If certain assets weren’t disclosed, additional time and resources may need to be dedicated to investigating the missing information.

Common Mistakes to Avoid on a Financial Statement

There are several common mistakes that people often make when preparing financial statements. The following errors can easily be avoided to help ensure the divorce process runs smoothly and you are not left open to potential challenges brought by your spouse:

• Not understanding your expenses — List your expenses accurately on the form, rather than estimate them.
• Listing an expense more than once — If you list an expense in one section of the financial statement, you cannot also list it in another
• Understanding the number of pay periods and bi-weekly cycles in a year - there are 26 two (2) week cycles in a year. You can’t simply multiply a bi-weekly expense by two (2), to arrive at the monthly number. You must multiply by twenty-six (26) and divide by twelve (12).
• Forgetting about annual expenses — While the form asks you to list monthly expenses, some expenses are incurred annually and need to be taken into account.
• Using payment amounts that are no longer valid — Be sure to use the amount of current payments for expenses incurred, rather than past payment amounts.
• Failing to distinguish between your expenses and those of your children — The long form requires you to distinguish between your own expenses and those of your children. While some expenses benefit both you and your children, it’s vital to keep good records and seek the advice of an attorney when filling out the form.
• Not consulting with a lawyer before filling out the form — The financial statement is a complex and confusing document. Your attorney can answer any questions you have and advise you how to fill it out to ensure it is thorough and accurate.

Significantly, the financial statement is a court document that is signed under oath — this means that you are affirming the truthfulness of the contents in the document under penalty of perjury. If the court finds that you are willfully concealing financial information, various penalties can be imposed, including contempt of court. Deliberately hiding income can also result in your spouse being awarded a larger portion of the marital assets.

Contact an Experienced Maryland Divorce Attorney

Completing a financial statement in a Maryland divorce can be overwhelming and stressful. It’s essential to have a compassionate divorce attorney who can help you navigate the process. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce attorneys work closely with our clients for a wide variety of divorce and family law matters. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we work closely with our clients to achieve a positive outcome in every case.

To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (301) 658-7354 or contact us online.