Financial Statements

Introduction

The Financial Statement is a court required form that each party must complete in order to move forward in a divorce or paternity proceeding. This statement has been separated into two different forms. The Short Form is to be completed when making less than $75,000 a year, whereas the long form is to be completed if you make over $75,000 a year. Each form comes with schedules to be completed under certain circumstances; however, we will be covering that in a later portion of this Blog. You may find the Court’s fillable version of these forms here: https://www.mass.gov/filing-financial-statements-in-the-courts

The Financial Statement addresses all aspects of an individual’s financial situation, separated into sections that organize the form into categories that the court and your attorney can use for reference. These categories are Personal Information, Gross Income, Deductions from Gross Income, Gross Income from Prior Year, Weekly Expenses, Attorney Expenses, Assets and Liabilities. We will cover each individual section of the Financial Statement as we continue.

Please note that when completing the Financial Statement, it is imperative that you complete it with current and correct information and values. When you complete a Financial Statement, you are signing that the document is completely accurate. Remember, not completing the Financial Statement with complete accuracy is committing perjury and can lead to repercussions from the Judge.

Personal Information

This section is specifically to identify yourself to the court. It includes your name, address, social security number, telephone number, the number of children living with you and your employer information. It also includes whether you have health insurance, and your provider if you do.

Gross Income

This section will ask you for your gross income, and how it is received. Income includes but is not limited to: base and overtime pay from any occupation including self-employment, tips, commissions and bonuses, dividends and interests, trusts and annuities, pensions and retirement funds, social security benefits, disability or workers comp, public assistance such as welfare, child support, rental income from assets, royalties and other rights, and contributions from household members.

It is very important when completing this section that one refers to their most recent paystub for the information. As the court requires current values, using your most recent paystub will allow you to take the information you need directly from your records so that there’s no need to do any calculations yourself.

For Self-Employment and Rental Properties, there will be an attached schedule that the individual will need to complete. They are referred to as a Schedule A and a Schedule B respectively. These forms, along with other helpful information, can be found here: https://www.mass.gov/lists/court-financial-statement-forms

Schedule A: This schedule is for Self-Employment. It covers your Gross Monthly Receipts, Monthly Business Expenses, Weekly Business Income, and the Nature of your business (whether or not the business is seasonal). With this information, the schedule will help you calculate exactly how much income you are making from your business.

Schedule B: This schedule is for any Rental Properties that an individual may have. This income is calculated by annual rent received compared to annual rental expenses. Using the difference between these two figures, one may divide by 52.2 to receive a weekly amount for total weekly rental income received. The court fillable form will do this calculation for you.

Please note that your tax returns will show all of the categories required, except depreciation.

For both schedules, you should refer to your Tax Returns, as the categories presented will match up directly with the information required.

Weekly Expenses

The next major category that should be discussed is the Weekly Expenses Not Deducted From Pay. This section is used to calculate your total weekly expenses. Note that to properly calculate your weekly expenses, you would divide your monthly expenses by 4.3 and your annual expenses by 52.2.

These expenses include, but are not limited to rent or mortgage, insurance not deducted from your pay, food and water, laundry and dry cleaning, motor vehicle expenses, etc. It’s important that you accurately calculate all your weekly expenses, even the small items like your daily coffee or lunch. When doing so, it’s best to retrace your steps of your day-to-day life. After that, think of things you pay for every week like gas for your car or groceries for your home. Then, make sure you calculate every monthly expense including your streaming services, phone bill, television or internet, and any other subscriptions you may have.

It is especially important to make sure you calculate your expenses when in a divorce case, as they represent your Need and Ability to Pay. Need and Ability to Pay is used to calculate certain aspects of a divorce such as Alimony.

Assets

Assets are funds and property that you own. They include real estate, motor vehicles, retirement plans, bank accounts, life insurance values, stocks, bonds, and collections as well as liabilities such us credit cards and loans. When completing this form, it’s important to think about all property and accounts that you have, even those located outside of the country.

Your assets are especially important in divorce cases, as during a divorce, assets are commonly ordered to be split between the parties. This includes any funds earned from the selling of any properties owned by either of the parties. It is important to remember that in Massachusetts under General Law Chapter 208 §34, any asset owned by one party is subject to division between he parties by the equitable division process.

It is not advisable to hide assets, as that is failing to complete the Financial Statement truthfully and accurately, which is committing perjury and may result in repercussions from the judge.

Liabilities

Liabilities are any expenses that you have incurred in which you owe a debt. These are included but not limited to credit cards and loans. When completing this section, you are asked for the creditor, the date the debt was incurred, the balance, and your minimum weekly payment towards the balance. When completing this section, it’s important to understand that any and all debts can be listed here. If you have a federal student loan, this would be the place to list it.