What Is A Financial Statement And Why Do I Need To Complete It During A Divorce?

Answering The Question: What Is A Financial Statement And Why Do I Need To Complete It During A Divorce?

What Is a Financial Statement?

A financial statement is a detailed document that outlines your financial situation, including your income, expenses, assets, and liabilities. In the context of a divorce, this document provides the court with a clear and comprehensive snapshot of your financial life. This allows the judge to make fair and informed decisions about the division of property, spousal support (also known as alimony), and child support. In Maryland, both parties in a divorce are required to complete and submit a financial statement. This form must be filled out accurately and completely, as the information you provide will directly impact the outcome of your divorce settlement.

Why Is a Financial Statement Necessary in a Divorce?

Divorce involves not just the dissolution of a marriage but also the division of a couple’s shared life, which includes financial assets and responsibilities. A financial statement is necessary for several key reasons:

Ensures Transparency

The financial statement helps ensure transparency between both parties. By providing a detailed breakdown of income, expenses, assets, and debts, each spouse is given a clear understanding of the other’s financial situation. This is essential for fostering an environment of fairness and trust during negotiations, especially when determining spousal or child support.

Assists in Equitable Distribution of Assets and Debts

Maryland follows the principle of equitable distribution, which means that marital property and debts are divided fairly, though not necessarily equally. To achieve an equitable distribution, the court needs a full understanding of both parties’ finances. Your financial statement helps the court assess the value of your assets and liabilities, including real estate, retirement accounts, investments, and personal property. It also highlights your debts, such as mortgages, credit card balances, and loans. With all this information at hand, the court can determine how to divide assets and liabilities in a manner that is fair to both parties.

Determines Spousal Support (Alimony)

In many divorce cases, one spouse may be entitled to receive spousal support or alimony. Alimony is financial support paid by one spouse to the other to help maintain the receiving spouse’s standard of living after the divorce. The financial statement is critical in determining whether alimony is warranted, how much should be paid, and for how long. When assessing alimony, the court considers several factors, including the length of the marriage, each spouse’s financial situation, and their respective earning capacities. A well-prepared financial statement gives the court a clear view of your financial needs and capabilities, making it easier to establish a fair alimony agreement.

Calculates Child Support

If children are involved, the financial statement also plays a significant role in determining child support. Maryland has specific guidelines for calculating child support based on the combined income of both parents and other factors, such as the number of children and any extraordinary expenses (e.g., medical or educational needs). The financial statement ensures that the court has accurate information about each parent’s financial situation so that child support can be calculated fairly. The court uses the financial statement to assess the income, expenses, and resources available to both parents. The goal is to ensure that children are adequately provided for, and the financial statement is crucial in achieving that objective.

Ensures Compliance with Court Rules

Completing a financial statement is not optional—it is a legal requirement during a divorce in Maryland. Failing to provide a completed financial statement can delay your divorce proceedings or result in unfavorable outcomes. Courts rely on this document to make decisions that impact your financial future, so it’s essential to complete it thoroughly and accurately. Providing incomplete or inaccurate information can also lead to legal consequences, such as penalties or accusations of dishonesty, which can harm your credibility in court.

What Should Be Included in a Financial Statement?

Completing a financial statement can feel daunting, especially if your finances are complex. However, having a clear understanding of what needs to be included can make the process more manageable. A typical financial statement will require you to disclose the following:

• Income: All sources of income, including wages, bonuses, commissions, rental income, investment income, and any government benefits (e.g., Social Security).
• Expenses: A breakdown of your monthly expenses, such as housing costs, utilities, groceries, transportation, insurance premiums, and childcare expenses.
• Assets: A list of all assets, including real estate, vehicles, bank accounts, retirement accounts, stocks, bonds, and personal property (e.g., jewelry, art, and furniture).
• Liabilities: A detailed list of debts, such as mortgages, car loans, credit card balances, student loans, and any other outstanding obligations.

In some cases, you may also be required to provide supporting documentation, such as tax returns, bank statements, pay stubs, and appraisals for valuable assets. Your family law attorney can help ensure that you provide all the necessary information and documentation to meet the court’s requirements.

How Can an Attorney Help You Complete a Financial Statement?

Navigating the complexities of a financial statement can be challenging, particularly during the emotional turmoil of a divorce. Working with an experienced family law attorney, like those at Wobber Law Group in Towson, Maryland, can significantly ease the process. Here’s how an attorney can help:

• Accuracy and Completeness: Your attorney will ensure that your financial statement is completed accurately and thoroughly, reducing the risk of delays or complications in your divorce proceedings.
• Valuing Assets and Debts: Some assets, like real estate or retirement accounts, may require professional valuations. Your attorney can guide you in obtaining accurate appraisals and ensure that all your assets and debts are properly accounted for.
• Protecting Your Rights: An attorney will advocate for your financial interests, ensuring that the court has a clear understanding of your financial situation so that any decisions regarding property division, spousal support, or child support are fair and just.
• Understanding the Law: Maryland’s divorce laws can be complex, and the court process can be intimidating. Your attorney will provide you with the legal guidance you need to navigate the financial aspects of your divorce with confidence.

Contact Wobber Law Group for a Divorce Attorney in Towson, Maryland

If you are going through a divorce in Towson, Maryland, and need help completing your financial statement or navigating the divorce process, Wobber Law Group is here to assist you. Our experienced family law attorneys understand the complexities of divorce and are dedicated to protecting your rights and ensuring a fair outcome.

Don’t leave your financial future to chance—contact Wobber Law Group today to schedule a consultation. Let us provide you with the expert legal guidance you need to move forward with confidence. Our team is committed to helping you through every step of the divorce process, from completing financial statements to securing a fair settlement. At Wobber Law Group, your family’s well-being is our top priority. Reach out today to learn how we can support you during this challenging time.