Completing the Circuit Court’s Financial Statement for a Divorce Case
Maryland Rule 9.203 governs the use of this form when an individual is seeking:
- child support or
If the parties have a child but are not married and are not seeking a divorce or annulment, a shorter form is used.
Each party to a divorce action in which child support and/or alimony is an issue is required to fully complete this financial statement. There are many rules and laws governing how to properly complete it. The bottom line is that this form, when properly completed, may yield excellent results. Most of my clients are not familiar with the rules and laws so that often, without that knowledge, this form is not completed properly.
As is common with many financial statements of different types, this court financial statement consists of Categories:
- monthly expenses
- income from all sources
- assets and liabilities
Amounts for expenses are ACTUAL, not “hoped for” or other good reasons. If you asked most people how they would calculate their monthly average grocery bill for an entire month, they would respond by multiplying the average weekly grocery receipt by four. The financial statement requires the person filling out the form to multiply the average weekly grocery receipt by 4.3 as there are actually 4.3 weeks in one month. Let's assume your grocery receipts average $150 per week. Multiplying $150 by 4 would result in a monthly expense of $600. This does not reflect your circumstance and does not meet the court’s requirements. The need is to multiply $150 x 4.3 which equals $645.
- PRIMARY RESIDENCE.
Within this category you would place either your monthly mortgage amount or your monthly rent amount. If you're living with relatives, there is a need to determine the fair market value of the rooms that you occupy. Homeowner’s insurance may be part of your mortgage. Easiest way of determining whether or not homeowner’s insurance is included in your mortgage amount is to look at a monthly bill or the annual analysis of what is called your “escrow account”.
Taxes and Ground Rent. Here you need to go to the monthly bill and see if taxes or ground rent are part of the mortgage or if they are paid annually or semiannually or at some other agreed time.
Gas and Electric. Obviously if don’t have a gas service, then drop to the bottom and enter the amount for electric only. If you are renting, your utilities may be included in your rent. Heat fueled by oil will require additional efforts because deliveries may be once or more often per year. If the oil is delivered once a year and is consumed within 12 months, divide the total bill by 12 months. With gas and electric bills, some people use budget billing. Determining your monthly costs will be easier to complete however there may be adjustments to the budget amount. The most accurate way to determine your gas and electric total expense per year is to total all of the bills for the year and divide by 12.
Telephone. There are a number of issues to consider regarding telephone expenses. There are landlines, cell phones, and family plans. There is also a designation call cell phone/pager: a simple approach where there are multiple users of the cell phone is to apportion the cost of the cell phone by the number of users. At times there are bundles wherein a cell phone is also part of a large provider such as Verizon or Comcast. This is not a major problem but there is a need to understand first the cost attributed to each of the bundled services. For example, the Internet may be a service billed in a “bundle” along with the television, the purchase of videos or sporting events, and the telephone. We can assist you in ferreting out how to come up with the proper monthly expense.
Also there is a new issue of how to apportion mortgage and utilities when there are minor children and/or other occupants living in the house such as relatives and/or friends. If you're not paying for the services as described above and, most particularly, rent in a household that is owned by a relative o a non-related party, the court will look at the fair market value of the rent. Let's assume you are living in two bedrooms, you in one bedroom and your child in another. You may also have common use areas such as the kitchen and/or family room and other benefits. Fair market value should be placed on the financial statement for the free rent and/or other free services you receive.
Trash Removal will appear on your County tax bill and look at the dates for how many months apply.
Cell Phone/Pager expenses need to be divided among the number of users and the portion that applies to older children.
All the other items should be straight forward.
SECONDARY RESIDENCE should be treated similar to the primary residence but if you rent the property and receive rental income, that should be discussed with the lawyer. All should be discussed with the lawyer because facts can affect outcomes.
- OTHER HOUSEHOLD NECESSITIES
Food. Remember to take the weekly receipts for food and multiply by 4.3 . Do not include the expense of “eating out” in this category . Also, apportion the amount between the custodial parent and the Children. The remainder items should not be difficult but be sure to complete them as well.
Health Insurance. This item creates numerous problems because of changes in the custodial arrangement. Let's assume one spouse has the children more than the other and the other spouse has the children every other weekend for two overnights and at other reasonable times. Typically, one spouse paid for health insurance and there is a need to break down the amount solely attributable to that spouse and apportion a percentage of the total premium to the children. An explanation of how to do this would require much more information. Here is where the lawyer can assist his or her client to establish how much of the total premium is designated for the spouse having primary custody and the amount attributable to children.
The remainder items will require medical bills, co-pays, and insurance policies. Also, medical expenses that exceed $100 per illness affect child support. The financial statement does not treat that issue however it may be necessary to support with documents that are bundled for each illness.
- SCHOOL EXPENSES
These items involve good record-keeping through having adequate support documentation for each expense.
- RECREATION AND ENTERTAINMENT
Most of these items are not difficult to identify and treat appropriately.
Camp. This expense is actually for summer camp where a child attends part of the summer for 12 weeks or less. Determine the total cost including fees, side trips, equipment, and other costs. The total cost is then divided by 12 months. If you think about what I just said, it will probably make sense. The remainder should not be difficult.
- TRANSPORTATION EXPENSE
This area poses problems because most people do not replace tires once a year. Here is where you'll have to approximate your mileage and prorate the tires over a period of months or years. Also, repairs produce problems involving less cost to new car maintenance versus the vehicle that many parties are stuck with that have very large monthly and annual costs. Each case is different based on the facts.
Again, keeping records of these expenditures will support what you put down as what you have actually been spending.
- MONTHLY CREDIT CARD EXPENSES
This is one of the more difficult areas of monthly expenses. Here is where the lawyer can respond to specific factual circumstances. Often this area may involve the inability to make a total payoff of each monthly credit card bill. Minimum payments may be required. It is very difficult to make generalized statements about what to do with credit cards.
Another problem for a lawyer is the use of a debit card. Always have a detailed receipt of what you purchased with your debit card; otherwise seeking to remember what you purchased will be very difficult. The item “Other” may involve installment payments for furniture, carpeting, and other monthly payments not specifically listed.
This area is a challenge for some. On the assumption there is adequate funds for clothing for both parent and children, I recommend clients to list what they have been purchasing in the past 12 to 24 months. I suggest approaching clothing according to seasons as well as CONSIDERING winter coats, raincoats, shoes, and customary clothing.
Most of these items are not difficult to document.
This area especially dealing with income often presents the most difficulty for clients. First, if you look at the titles parallel to GROSS MONTHLY WAGES, you will see Monthly, Weekly, Every Two Weeks and Twice a Month. The last two seem to be the same but they're not. “Biweekly” pay means that the individual is paid 26 times during the year however “twice monthly” means being paid 24 times a year. If you're paid weekly, you must multiply your gross weekly income by 4.3. Withholding of taxes and other deductions must also be stated monthly. Other income can be a part-time job, investment income, occasional income or sometimes governmental benefits or where an employer makes payments as though they are business expenses but, in fact, the payments are paid for personal expenses. Also, let's assume one spouse lives with his or her parents and occupies a bedroom or more than one bedroom and has use of common areas. Courts will treat those free rentals as additional income but not in all cases. Alimony is also includable as income. Child support from another relationship is not includable as income. However, if your client is paying child support for a child not of the marriage, it may affect child support guidelines applications.3. ASSETS AND LIABILITIES
One of the important concepts is marital property. Let's assume possession of an asset is held by your spouse or your spouse as a 401(k), 403B, OR SOME FORM of future pension that is vested. Here is where although you do not have title, you have a marital property interest and therefore you should list the asset for its entire value, assuming you know the value. For other assets, when information is provided concerning value, the proper way to determine the value is called the FAIR MARKET VALUE. This means what the buyer and seller agree in a transaction as to the value. Real estate and other assets can have appraisals performed to determine the fair market value. An engagement ring is not marital property, however, should a ring be substituted for the engagement ring while the parties are married, it becomes marital property subject to division by the court. However, if you spent $10,000 on the ring, it is most likely that the fair market value the day after the sale is probably 50% of what you paid. Furniture, other jewelry, automobiles, motorcycles, a snow blower, all of these either depreciates over time or after the sale value does not sustain the purchase price.LIABILITIES
Again go back to obtaining monthly statements that show the amounts owed. These documents need to be current and updated during the litigation process.
Completing the Maryland courts’ financial statement can be very complex, confusing, and stressful. An attorney can provide you with valuable support and encouragement.
Fredric G. Antenberg has over 30 years’ experience representing clients in divorce and family law related matters in Howard County and surrounding counties in Central Maryland. Give him a call today for a Free Initial Consultation if you are involved in a separation or divorce or are contemplating either. Call Fred today at 410-730-4404.