Your Financial Declaration may be one of the most important documents you file in your case. Your Financial Declaration can help you, or haunt you, throughout your divorce and modification process.
If you are going through another court case (criminal law, guardianship, personal injury, etc.), this guide still has value to you. I have found an accurate Financial Declarations to be a great budgeting tool.
I always advise my clients to hire an attorney to prepare the Financial Declaration (I charge a flat fee of $100 to review, revise, and play “devil’s advocate” against your Financial Declaration). Before I begin my process, I need you to do yours:
Attached is a form “Financial Declaration” in Microsoft Word Format for you to begin drafting.
1. Download the Financial Declaration to your computer. Make sure you save it to a safe location.
2. Scroll down to the “Instructions.” You will go back to the caption later, but you need to begin compiling your documents as soon as possible. It will take time.
When serving your Financial Declaration, you need to attached your:
o Last two tax returns for the two (2) years before filing your petition. This includes your complete federal and state income tax returns, including Form W-2, Form 1099, and Form K-1, and supporting tax schedules and attachments filed by you and by any entity in which you have a majority or controlling interest.
o Pay stubs and other evidence of all earned and un-earned income for the 12 months before the petition in this case was filed.
o All loan applications and financial statements prepared or used by the party completing the financial declaration within the 12 months before the petition in this case was filed. This includes auto loan applications, apartment rental agreements, and home loan applications.
o Documents verifying the value of all real estate in which you have an interest, including the most recent appraisal, tax valuation and refinance documents.
o All statements for the 3 months before the petition in this case was filed for all financial accounts, including checking, savings, money market funds, certificates of deposit, brokerage, investment, and retirement. This includes statements verifying your retirement accounts.
3. Now that you have obtained your Financial Declaration supporting documents (or waiting to hear from your retirement account representative, accountant, or HR representative), you can begin the drafting.
4. Start at the top left corner. In the space provided, type your name, address, phone number, e-mail, and status.
5. Determine your jurisdiction and case information. Use it to complete the remainder of your caption.
6. Considering my jurisdiction, my caption would look something like this:
7. Now that you have drafted your caption, work your way down to “paragraph 1,” requesting your Social Security Number (last four digits). Delete the line following the colon, and type in the last four digits of your social security number.
8. Complete paragraph 2 (employment status). This isn't difficult, just make sure its clean and complete.
9. Beginning at paragraph 3, you must be very careful. Remember, when drafting your Financial Declaration you must be accurate and professional.
10. When drafting your gross monthly income, you must be as accurate as possible, and ensure you can defend the number you list. If your action starts at the beginning of the year, I recommend using your most recent tax return (and/or W-2 Form) and dividing the gross monthly income listed by 12. Any later in the year and I like to use paycheck stubs. Divide the year-to-date gross income by the number of months provided in the period end date, and you have an accurate gross monthly income.
11. Next, focus on your monthly tax deductions. As mentioned above, you can use your tax return or paycheck stubs to determine federal income tax, state income tax, social security, medicare, etc. Make sure you use the same system in calculating taxes that you used to calculate your gross income.
12. Your real property shouldn't be too difficult. Both parties usually have the same information, so you really need to focus on the current value and amount owed.
13. When you list a “current value” of your real property, try to have some basis behind it. Is the current value similar to the original cost? If you’re desperate, you can use Zillow. Make sure you can defend the number you list.
14. Obtain a statement from your financial institution verifying the amount owed on your real property. Be specific. It should look something like: “$176,928 as of 10/4/13”
15. Why is this paragraph important? Equity in a house is based on (1) the current value of the house and (2) the amount owed on the house. Depending on whether the equity increased during the marriage, this is a marital asset.
16. List the marital “personal property” you and your spouse accrued during the marriage. List the larger items, such as vehicles, boats, and riding mowers. In determining the current value, use Bluebook, KSL, and other sites to find out the value of your personal property.
17. When you list the “amount owed” for your car, make sure you include the date. For example, it should look something like “$3,335 as of 10/4/13.”
18. For most people, this isn't applicable, and it is fairly self-explanatory. For tips, give me a call at 801-784-0529.
19. Now that you are at paragraph 9, be as accurate as possible.
20. Nearly every person has a bank or credit union account, so I have provided an example of how your Financial declaration should look:
21. No matter how small of an account, make sure you include the account. In some cases, you may need to separate your accounts (if you have a savings account with one account number, and a checking account with another).
22. The next most common item in Financial Declarations are the “retirement accounts.” Depending on the value of the retirement account at the time of the marriage and the current value of the retirement account, some or all of the retirement account may be a marital asset to be divided under Woodward v. Woodward. When listing the current value, follow the guidelines for bank accounts and other assets.
23. Everybody has some form of cash (even if it’s just a few dollars). List it, and the date you had the cash in your possession.
24. At this point, you should be getting the hang of drafting your Financial Declaration. List every debt, the purpose of the debt, the names on the debt, the amount owed (and the “as of date”) and monthly payments.
25. It should look something like this:
26. Once again, be very careful about how you draft your monthly expenses.
27. Remember, these expenses are calculated over the last year. Alimony is determined on lifestyle, so look at what you have been spending overall.
28. Some of the monthly expenses are set. You may pay $2,075 each month for your mortgage, $445 toward your automobile loan, $35.67 for your internet….you get the idea. These are the easy expenses. List them, and move on.
29. Next, you will find monthly expenses that fluctuate month-by-month. Examples of these expenses are food, gasoline, clothing, electricity, gas, and water, sewer, garbage, etc. I like to mark these items with an asterisk (*), and then, in paragraph 12, you can explain the basis of your estimation.
30. Do not just “guess” what your monthly expenses are. For example, if you are calculating your grocery bill, rather than listing “food” at $200/month, add together your grocery bills over a three to twelve month period, divide them by the same number of months, then divide the bills by the number of people who have historically enjoyed the benefits of your groceries (remember that when it comes to food, it is more expensive to buy food for one person, then it is to buy food for three, so if you notice an increase in groceries expenses in the recent month(s) factor that into the equation).
31. Look over your monthly expenses after you have listed them. Are they accurate? Inflated? Lacking necessary expenses?
32. Use this paragraph table freely. If you have estimated an expense, guessed an expense, estimated the value of an account, or believe you may be inaccurate anywhere in your Financial Declaration, you will want to explain this in paragraph 12. It will protect you if the opposing party claims you “lied” about something.
33. Do what you can to obtain all of the required supporting documents. If you cannot obtain the documents, explain why and/or when you can obtain them (if you can obtain them). While the opposing party may have the documents you need, try not to depend on them.
If you need help, feel free to give me a call at 801-784-0529 or e-mail me at firstname.lastname@example.org.