Hello, I am Linda Wilson with the Feldstein Family Law Group.
Today, I would like to talk to you about Financial Statements. You will need to complete a Financial Statement if your family law matter involves child or spousal support or property division. If you have looked at a Financial Statement before, it can be pretty intimidating. Once you understand the format and purposes of a financial statement, you won’t find it so daunting.
What is a Financial Statement?
Well, it’s a form that serves multiple purposes.
First, it confirms your source or sources of income, and how much income you make. This is Part 1: Income of the Financial Statement.
Second, it shows what you spend that income on, and whether you have some money left over every month, or whether you are spending more than you make. This is Part 2: Expenses. If there are section 7 expenses (special or extraordinary expenses for the children), you will also need to complete Schedule B of the Financial Statement.
Third, it shows if you are living with anyone who is helping you pay your bills. This is Part 3 of the Financial Statement, which only applies in cases of undue hardship or spousal support.
Fourth, it shows the value of all of your assets on three important dates:
- Your date of marriage;
- The date you separated from your spouse (this is also known as valuation date); and
- The day you sign the Financial Statement (today’s value).
Fifth, it shows the value of your debts on those same three dates.
And sixth, it lists any property that you are allowed to exclude by special rules. For example, this may be a gift or inheritance received after marriage but before your date of separation.
When you are finished filling in all of the blanks on the Financial Statement, you will need to sign it and swear that the information is true to the best of your knowledge. This needs be done in front of a Commissioner for Taking Oaths and Affidavits, such as a lawyer. This is very important, since accurately and truthfully disclosing your entire financial situation is essential to resolving your family law issues.
It’s also a good idea to provide a financial disclosure brief to your spouse and provide proof, such as a bank statement or credit card statement, for every value listed on your Financial Statement.
Why do we use Financial Statements?
Your income is key to figuring out how much you may have to pay in child support, and how much spousal support you may receive or have to pay, so confirming how much you actually earn is crucial.
Second, if you want to claim spousal support, you may be asked to show you have a need for the support, and if you do not want to pay spousal support, you may be asked to show that you do not have the means to pay.
Third, if someone is helping you pay your bills, this would also be relevant to whether you have a need or the means to pay spousal support.
Fourth, if you have property from your marriage to divide with your spouse, we need to know the value of the property you gained from the date you married your spouse until you separated.
We also want to know how much debt you added during that same time period because you are allowed to deduct that from the net worth of the property that you will eventually divide with your spouse.
Finally, we need to know the value of any items you are allowed to exclude from the net worth of the property you gained during your marriage.
Why do we need to know the value of what you have on the date you sign the Financial Statement? That goes to the issue of spousal support. If your net worth has increased from the date of separation, you would have a harder time arguing that you need spousal support or that you can’t pay spousal support.
What happens next?
When both spouses properly complete their financial statements, we can now confirm how much child support should be paid, how much each parent should pay towards any special and extraordinary expenses for the children, how much spousal support may be paid, and how much one spouse may have to pay to the other to equalize their property.
For these reasons, you should ensure your Financial Statement is properly completed, and you may want to consider consulting with an experienced family lawyer to help you.
I’m Linda Wilson. Thank you for watching today. If you need more information and wish to schedule an initial consultation, please visit our website at www.separation.ca or contact our office at 905-415-1636.