Financial Statements in Divorce/Custody Cases: The Long Form vs. The Short Form and How to Complete the Forms Correctly
In divorce and custody cases, there are two types of financial statements. The first is the Short Form Financial Statement (Short Form Available Here) and the second is the Long Form Financial Statement (Long Form Available Here). If you are filing for custody or divorce, it is likely you will need one form or the other form. If you have an attorney, he or she is going to tell you the importance of the forms and will likely help you complete the form and review it with you before it is filed. But if you do not have an attorney, financial statements can be confusing and completing them a daunting task. Many prospective clients have the same questions: What is a financial statement? Which financial statement do I need to fill out? How do I correctly fill the form out? Let’s talk about it.
What is a Financial Statement?
A financial statement is a form required to be filed with the Court in cases involving child support or alimony. A financial statement is required to be filed with an initial Complaint or Answer. Which financial statement you file depends on the underlying facts of your case. Financial statements tell the Court about your income and your/the child(ren)’s expenses.
Which Financial Statement do I need to fill out?
The type of financial statement you must file depends on the type of case you are filing, the type of relief you are requesting, and the parties’ incomes. In general, if you are filing for custody/child support, or a divorce where alimony is not being requested, you will file a Short Form Financial Statements. Short Form Financial Statements are used when the Maryland Child Support Guidelines will be applied in a case. Long Form Financial Statements are used when there is a divorce proceeding where alimony is requested or in divorce/child support cases that are “over the guidelines”, meaning that the combined gross income of the parties (spouse/spouse or parent/parent) is over $30,000 per month (or $360,000 in a year). If you are unsure of the other party’s income and are not requesting alimony, you can always start with a Short Form Financial Statement and then amend it later to a Long Form Financial Statement, if necessary.
How do I fill out the Financial Statement?
Short Form Financial Statement:
Short Form Financial Statements are much easier and, well, shorter. Since the Short Form Financial Statement is used when the Maryland Child Support Guidelines will be applied (which is in all cases that are not above the guidelines), the only information required is what is necessary for the Court to run the guidelines. There are 8 potential numbers you will need to provide the court:
Income: This is your gross monthly income. It includes all sources of income, including income from any job(s), self-employment, rental income, disability benefits, retirement/pension income, or any other regular monthly income. It does not include public assistance benefits such as food stamps or other welfare assistance. There is also separate line for alimony income, so do not put it here.
Child Support I am paying for my other child(ren) each month: this is for children not subject to this case. So, for example, if you have another child with a parent not in the case and you are paying them regular support. While the form really anticipates court-ordered child support payments from another case, you can also list non-court ordered support for other children, but you will need to be able to show/prove to the court that you are actually making those payments and the court will have discretion in how to consider that amount being paid since it is not court-ordered.
Alimony I am paying each month: If you are court-ordered to pay alimony to another person either in this case or another case, you will list the monthly amount here.
Alimony I am receiving each month: If you are receiving court-ordered alimony from another person either in this case or another case, you will list the monthly amount here.
Monthly Health Insurance Premium: The amount here should be for the children only. To determine the amount for just the children, find your benefits plan and take the monthly premium for the plan you have (family or employee + children) and subtract the self-only premium amount. That will give you what it costs to have the children on the plan.
Work-related monthly childcare expenses: This is for daycare or before/after school care expenses that you incur for the child(ren) due to your work. If you are a stay-at-home parent, you will not have work-related childcare expenses. However, if you work from home and your child(ren) go to daycare or before/after care so you are able to complete your job, those expenses can be included, even though you are home. This line item does not include babysitting or care for the children when you are not working.
Extraordinary monthly medical expenses: This is for regularly, recurring medical expenses for a child per month. It should not include things like yearly physicals/check-ups, but should include expenses for co-pays for a therapist if your child sees a therapist regularly, or monthly trips to an allergist, or prescribed monthly medication (like an ADHD or asthma medication).
School and Transportation Expenses: If your child attends private school, the monthly tuition will go here. If you pay a fee to have bus transportation, that would be included here. If the school has recommended private tutoring, such fees could also be included here (if they are regular and ongoing).
Long Form Financial Statement:
The Long Form Financial Statement is much more complex. Again, this is for when alimony is requested or if the combined incomes of the parents is over $30,000. The Long Form Financial Statement is designed to give the Court a snapshot of what your income and all expenses are per month, for you and the children (if there are children).
The first 5 pages of the Long Form Financial Statement asks for your monthly expenses (for you and any children). Many of the expenses, such as rent or mortgage, are already monthly amounts. In that case, you just need to list the monthly amount that you pay. For expenses that are not monthly, such as water bills, car repairs, vacations, etc., you should try to average those expenses to get a monthly amount. If your water bill is for 3 months, take the last two water bills (at least 6 months total), add them together, and then divide by 6 to get the average monthly amount. For vacations, you can look at your past vacation expenses and average them out over a year, then divide that by 12 to get an average monthly amount. Remember that the Court is using this to determine your average monthly expenses. So, if you generally take 2 weeks of vacation a year, and each week you spend $3,000 – then your average monthly expense would be $500. However, if last year you took a once-in-a-lifetime month-long trip to Europe and spent $20,000, that would not be the best example of your average vacation expenditure and looking to previous years will likely provide a more accurate picture. It is important you do not just “guess” at your spending; you want to pull your bills/credit and debit card transactions to try and get the most accurate numbers possible.
Since there is space for both “self” expenses and “children” expenses for each expense, there is going to be some overlap. For example, most people do not shop separately for food for children or food for themselves – it is just all on the grocery bill. You will need to use your best judgment here. If your total monthly food expenses are $1,000 and it’s a parent and three (3) children, a majority of food costs could be attributable directly to the children. Some attorneys will have you take the total bill and divide it by the number of people and then total it up appropriately (in the above scenario, that would be $250 for the person filing out the form and $750 for the children). There is no exact answer for this, because older children eat significantly more than younger ones so the proportions will always be subject to interpretation, so use your best judgment in dividing up those expenses that are not easily separated out.
For expenses like camp or tuition, those would only be for the children, so there should not be an amount under the “self” category – rather the entire expense goes to the children. Again, camps are usually not a “monthly” expense. If you have 2 children and they each typically go to 4 weeks of camp in the summer, add up the total costs for camps over the summer and then divide that by 12 to get the average monthly cost for those camps.
If there are expenses you do not have, you will just leave that section blank.
For the Income Statement – currently on page 5 of the Long Form Financial Statement – you will need to put your gross income from your job/self-employment and then list the deductions. If you are paid monthly and your income does not vary, you can just your most recent pay stub to figure out your monthly income and tax deductions. If you’re paid twice per month and your income does not vary, you will need to double your paycheck to determine the monthly amount. If you are paid every two weeks and your income does not vary, there are 26 pay periods in a year, so take your paycheck, multiply everything by 26 and then divide by 12. If your income varies (if you are in sales, for example, and get commission on top of a base salary OR if you are hourly and work more in some months than others), it’s important to find the most accurate information. If it is early in the year, you can use your last year W2, as long as you worked at your job for an entire year and maintained the same salary/rate for the current year, to determine your monthly income. If your income changed, or if it is more than a few months into the current year, the best thing to do is take your most recent pay stub and use the “Year to Date” payments to figure out what the average monthly amount is. So, if you are paid bi-weekly and it is halfway through the year, use your 13th pay stub, take the gross amount of your “year to date” earnings and divide it by 6 – that will give you the average amount you earn per month. You need to be careful if you received a bonus, since while that should be included in income, is not an ongoing amount you will get. If you received an annual bonus and you typically get one per year – you can separate that amount from your other earnings and divide it by 12 to get a monthly amount. Then, once you get a regular monthly amount, you can add the bonus amount to that for your total monthly income. You will also need to list any other forms of income (2nd job, rental income, disability income, alimony, or any other income streams).
For the Assets and Liabilities Section – You will want to use your most recent statement for each asset/liability. If you do not have a statement for an asset value, such as for your house, you can go online and use Redfin or Zillow to get an idea. If you have a recent appraisal, you should use that number. For automobiles, Kelley Blue Book will give you a value if you put in your vehicle’s information. For bank accounts, use the most recent bank statement you received. Remember that the liabilities (such as the mortgage and credit cards) are the total amounts owed, not what the monthly payment is.
There may be things that need explanation in your Financial Statement. You should feel free to put footnotes and attach them to your financial statement. For example, if you happen to win the lottery one year, that can count as income. However, it is not something that happens regularly (unless you are really, really lucky). So, if you won $20,000 in the lottery in 2023, you would put $1,666 on the “Other Gross Income” section of the income section. You could then put a footnote declaring that you won $20,000 from the lottery. That way you have disclosed the income to the Court, but the Court (and the opposing party/counsel) know that the $1,666 in additional income is not something you anticipate moving forward.
With either a Long or Short Form Financial Statement, you will want to keep all the documentation you use to complete your Financial Statement so you can prove the expenses to the Court and the opposing party/counsel. It is incredibly important that your financial statement is accurate as if your matter goes to trial, the opposing party/their attorney will be able to question you about your expenses/income and how you came up with those numbers. If your numbers are inaccurate, it could hurt your credibility. Additionally, for the Long Form Financial Statement, the Court relies heavily on it to determine the reasonable expenses for your children (or you, if alimony is requested). If the information is not accurate, the Court may not be able to determine what your/your children’s actual monthly expenses are and that could impact any potential alimony/child support award.
Financial statements are an extremely important part of any child support or alimony case. If you are filling out a financial statement and do not understand parts, or have questions, you should meet with an experienced family law attorney who will be able to provide you guidance based on your specific circumstances to ensure you accurately complete the form. Weinberg & Schwartz, LLC is currently accepting new clients and one of our attorneys will be happy to meet with you to discuss your needs.