In all Massachusetts divorce cases, each party is required to fill out a financial statement. So, every person getting a divorce (contested or uncontested) must fill one out. A financial statement is important because it is an overview of your current financial situation, and can help determine child support, spousal support, division of assets and division of any debt.
A financial statement reflects all of your income, expenses, assets and debt.
Your financial statement is a snapshot of your income, expenses, assets and liabilities as of the date you sign the document. As your divorce proceeds, your financial statement must be updated. A "snapshot" of your financial picture can be helpful to a judge in assessing the lifestyle you and your spouse enjoyed during your marriage, as well as the lifestyle you and your spouse provided for your children during the marriage. This is important, because it provides insight into whether you will need financial support from your spouse, or will need to pay your spouse financial support, after the divorce in order to maintain the lifestyle to which you and your children have become accustomed. In addition, the Financial Statement shows the judge your joint and individual assets and liabilities, so that they can determine an equitable division.
The long form vs. The short form:
There are two forms of financial statements, the long form and the short form:
- You will submit a short form financial statement if you make less than $75,000 in income annually.
- You will submit a long form financial statement if your annual income is $75,000 or more.
The financial statement includes four basic sections:
Income. This is the section that sets forth all of your income, from all sources. You must report you income for the prior year as well, and attach supporting tax forms to the back of your financial statement.
Expenses. The weekly expenses section of your financial statement shows all of your living expenses and deductions. It is very important that you carefully review all of your expenses to include a realistic picture of your expenditures, even if they exceed the income you earn without your spouse’s contribution.
Assets. In the assets section of the financial statement, you should make sure that you include all assets of any kind in which you have an interest, as well as assets which are held in your name for the benefit of another. Failure to disclose an interest in an asset could irreparably damage your credibility in court.
Liabilities. All liabilities must be disclosed on your financial statement. 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. Specifically, you must list the creditor, the kind of debt, when you first borrowed the money and the current amount due. If your credit card amount due represents multiple purchases made at different times, then the date said debt was incurred would be labeled as “ongoing”. Additionally, if you have credit cards with zero balances, it is always helpful to disclose said accounts in order to fully understand your financial status. As with all matters that may need clarification, it is always better to include an explanatory footnote, rather than risk a misrepresentation of the number you have already included in any section of the financial statement.
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