When Do You Need to File a Long-Form Financial Statement in Maryland?

Divorce is a legal matter, but it is also a financial one. There are many financial aspects to divorce, including the amount of child support, whether one party should pay alimony to the other, and whether one party should be responsible for all or part of the other’s attorney fees. In order to determine these issues, courts need to have reliable financial information about both spouses.

That information comes from a financial statement form that must be submitted along with the complaint and answer in a civil domestic case (such as divorce or child custody) in Maryland. There are two versions of the form: a short form and a long form. The long-form financial statement in Maryland is six pages (compared to two in the short form) and contains much more detail, including particulars of monthly expenses and income.

Most people, given their preference, would complete the short form and be done with it. That’s understandable; often, the only thing less enjoyable than closely examining one’s finances is doing so in the context of a divorce. However, it is frequently necessary to complete the Maryland long-form financial statement, and even if it’s not strictly necessary, it can be very beneficial. Let’s discuss when you need to file the long-form financial statement in Maryland—and when you should, even if you don’t absolutely have to.

Long-Form Financial Statement vs. Short Form: How to Decide

Rather than asking “When do I need to use the Maryland long-form financial statement?” an easier question to answer is, “When can I use the short form financial statement?” The short form is the appropriate choice in limited circumstances when both of the following are true:

• Child support is within the guidelines formula; and
• Neither party is seeking alimony.

Otherwise, if either alimony is claimed, or child support will be “above guidelines,” (or the court orders one for other reasons) a long-form financial statement is required by the court rules. Look at it as an investment of your time and effort in a better financial outcome for your family law matter. You should be meticulous when filling this form out; the court is relying on the information you provide, and errors or inaccuracies may cause the judge to question your credibility.

While the form can be amended if necessary, it’s best to get it right the first time. Accuracy is so important that our firm provides extensive guidance for the preparation of a long form financial statement, including:

• Base reporting on the longest average monthly experience possible, up to one year.
• Back up your reporting with documents.
• Avoid round numbers in reporting; be precise.
• Never estimate a figure without a footnote explaining why.
• Footnote extensively; doing so can be beneficial later at trial.

Advantages of Using the Long-Form Financial Statement in Maryland

Facilitate Settlement

There are, generally speaking, two ways to resolve a divorce or other family law matter: by settlement or by trial. Settlement is almost always preferable, as it is quicker and usually less stressful and costly. That said, a swift settlement isn’t a good thing if it is unfavorable to you.

A Maryland long-form financial statement helps you and your spouse better understand your financial assets and needs. Armed with that knowledge, you can reach a settlement that better meets those needs and allows you both to move forward in a stronger financial position after divorce. Having good hard financial numbers available demonstrates to your spouse that you have the actual need or limited ability to pay, encouraging them to accept, rather than push back against, your position.

Get Alimony and Child Support Right

If alimony is claimed in a pleading, or child support amounts are outside the guidelines, you and your spouse or partner will need to complete the long-form financial statement. Not only is the long-form financial statement required in these cases, but it also helps everyone involved to be confident that the payment amounts are appropriate.

Establish (or Destroy) Credibility

At the beginning of a family law case when you and your spouse or former partner fill out your financial statements, it may feel like just something to get through so that you can file your complaint or answer. You may even wonder if anyone even looks at the form.

The answer, whether or not your case goes to trial, is that they absolutely do. In fact, a long-form financial statement is probably the single most important document in your divorce case. As mentioned above, the care with which you fill out your long-form financial statement can boost your credibility, or damage it, both during negotiations and at trial with the judge. The same is true of the other party’s credibility. If you know or suspect that your spouse has been inaccurate in completing their form, especially if you have proof, your family law attorney can use that information strategically to attack their credibility more broadly.

Common Errors to Avoid When Completing Your Long-Form Financial Statement

Now that you understand the importance of accuracy in completing a Maryland long-form financial statement, you should be aware of common mistakes to avoid in filling out the form:

• “Double-dipping:” If you list an expense in one area of the form, be careful not to list it in another. For example, if you contribute $100 per month to your place of worship, don’t list it on the form under both “gifts to others” and “religious contributions.”
• Confusing “bi-weekly” and “twice monthly” pay. In most months, you will receive two paychecks per month whether you are paid bi-weekly or twice monthly. However, with biweekly pay, your annual salary (assuming equal pay each pay period) will be 26 times the amount of each check. If you are paid twice monthly (such as on the 1st and 16th of each month), your annual salary will be 24 times the amount on one check. Getting it wrong can cause you to under or over-report income.
• Using past payments that will not exist, or will be different in amount, going forward. For instance, if your rent has recently gone up from $1600 to $1900, use the amount of your current payments, rather than past payments. Similarly, if you just paid off your car, you cannot list monthly car payments on your long-form financial statement.
• Listing expenses the other party pays and is responsible for paying, or will be after the divorce.

If you are considering divorce, it may help you to begin keeping a spreadsheet on your computer listing all of your monthly expenses, using the financial statement form as a guide, and creating additional categories on your spreadsheet for regular expenses that are not listed on the form.

If you are using a long-form financial statement, you should be diligent about distinguishing between your own expenses and those for your children. One way of doing so is to keep a separate debit or credit card that you use only for the purpose of paying for child-related expenses such as clothing, school tuition, extracurricular activities, and so on. You should also be meticulous about keeping receipts for child-related costs. Because some fixed expenses such as housing, transportation, and health insurance benefit both you and your children, it is especially important to have the guidance of competent legal counsel to apportion these expenses.

Admittedly, filling out a Maryland long-form financial statement can be a daunting process. But getting it right is worth the effort. An experienced attorney can make the process easier. To learn more about financial statements in Maryland family law matters, contact Strickler, Platnick & Hatfield to schedule a consultation.