A Magistrate’s Hearing – Having Your Finances in Order

Preparing for the Magistrate’s Hearing – Having an accurate Financial Statement (formerly called a “Master’s Hearing”)

One of the most important areas in preparing for a Magistrate’s Hearing is accurately completing the financial statement.

Recently I attended a seminar organized by the Family Law Section of the Maryland Association for Justice (formerly known as the Maryland Trial Lawyers Association). The speakers were a judge and a magistrate (formerly called a “master”) who hear cases involving custody, child support, use and possession of the marital home and other related topics.

Often the Magistrate’s Hearing is the first court hearing in family law cases. Preparing and presenting a good case will often set the stage for future results. Once child custody is established on a temporary basis, it will often continue throughout the litigation of the case.

The financial statement, which shows monthly expenses, income, and assets and liabilities of the party, is one of the most important tools in the preparation process and as evidence at the trial. (Instruction: Click here for a link to the Court’s Financial Statement and a link to our Monthly Expense form).

The speakers emphasized the importance of completing the financial statement properly and provided comments regarding its importance. Most of the monthly expenses of the household are to be shown on the Financial Statement, including but not limited to expenses of primary and secondary residences such as mortgages, rent, insurances, upkeep and maintenance, utilities, telephone, and cable. Expenses also must be shown for other Household Necessities, such as food and clothing; and for expenses in the categories of medical and dental expenses, school expenses, recreation and entertainment, and transportation. There are also entries for Gross Monthly Income, Other Gross Income, Total Income, Total Expenses, and Excess or Deficit.

Both the client and attorney want to establish the maximum monthly expenses in each category with the hope of obtaining the maximum result of (temporary ) court-ordered alimony and child support. When presenting the case, it is not necessary to produce receipts however, on cross examination, you will likely have to justify your expenses in many categories so that having receipts that support and justify your expenses may enable you to prove your case.

Our office recommends to clients that they consider what documentation would be needed if he/she was to be reimbursed for business expenses from an employer. Would your employer require itemized receipts for mileage, repairs, hotel, meals or would they just accept your word? Our belief is that your employer would want receipts to support your business expenses and, likewise, the Court will likely consider the need to support your monthly expenses with receipts just as an employer would expect documents to support your expenses.

Are clients willing to provide receipts for each category and subcategory on their financial statement? Over the years some clients have been more diligent than others. Again, consider the fact that the party seeking court-ordered support needs to be able to provide sufficient documents to show that the expenses detailed on the Financial Statement are real. There are many management systems that enable systematic entries of the actual monthly expenses by category. One such system is QuickBooks. Often a review of banking statements is helpful also, however, with the use of debit cards becoming more and more popular the lawyer will often not have the ability to determine what the debit listed on the bank statement was for– with some exception such as Giant Food or Safeway. Even in those cases, however, while it could be assumed that the debit entry was for groceries, with a receipt showing an itemization of purchases, a judgment is made more readily as to in which category each item purchased falls.

The Financial Statement is required to show actual monthly expenses. Often there are circumstances of need that are opposite to actual monthly expenses. Here is an example of such an instance as illustrated at the seminar: The spouse who has custody of three children will need to move to an apartment in 60 days of the hearing date because the marital residence has a contact of sale on the property. Let’s assume that a three bedroom apartment is needed by the spouse and the cost of that apartment is $750 more a month than the current mortgage. The speakers suggested placing a footnote in the Financial Statement showing the fact that the amount is greater and the need is imminent. Another approach is to submit two financial statements– one showing actual monthly expenses and the other showing what is projected.

Both the magistrate and the judge said they often, as the trier of fact in family law cases, look to the original financial statement and compare it to the current financial statement. If judges and magistrates routinely make that kind of comparison, then it demonstrates the need to have accurate information to support the monthly expenses when the first financial statement is submitted.

Another area that was covered at the seminar was the financial statement of self-employed persons. One case study showed the gross income reported was over $200,000 greater than the net income. It was suggested to have sufficient explanation and documentation to show the divergence. Here it was recommended that a CPA be available to testify and justify the difference.

Preparing for the Magistrate’s Hearing is important and one of the most important areas of preparation is properly completing the financial statement, including having adequate documentation to support each area of monthly expenses.

Fred Antenberg is an Howard County Family Law Attorney who has over 30 years of experience in family law and so has experience in completing financial statements for Magistrate’s Hearings. Fred’s office is located in Columbia, Maryland, from which he serves clients in Howard County, Maryland, and surrounding counties.

CONTACT Fred Antenberg today at 410 730 4404 for a FREE CONSULTATION.