In a divorce case, Massachusetts Supplemental Probate Court Rule 401 provides that, within 45 days after the date of service of the Summons, each party must serve on the other party a complete and accurate financial statement. Rule 401 also allows the parties to make a request for financial statement as well.
The form of the financial statement which each party must complete is dependent upon his or her income. A party whose income equals or exceeds $75,000.00 must complete the long form financial statement. The long form financial statement should be printed on purple paper (although the Standards for Computer Generated Forms indicate both should be on pink paper, the long form available at the courthouse is on purple paper). A party whose income is less than $75,000.00 must complete the short form financial statement. The short form financial statement should be printed on pink paper. The short form financial statement is also available in Spanish and Portuguese.
Warning: Unless you have Acrobat Standard or Pro you won't be able to save any information you enter on these electronic court forms. If you enter information and save the document in Acrobat Reader (the free adobe program most people have on their computer), all of the entered information will disappear when you reopen it. We therefore recommend that you print the document immediately after you complete it, or simply print the blank document and work on it by hand.Many people find these forms confusing, and the court has provided some basic instructions for both the short form and the long form. In addition to these instructions, we have found that the following tips have been helpful to our clients:
Documents: When completing the financial statement it will be helpful if you have certain documents available to refer to. Collecting all of these documents before you begin drafting will make the process easier:
- most recent (or a representative) paystub;
- your last year's tax return with accompanying schedules, W2s and 1099s;
- most recent statements for your bank accounts, retirement accounts, investment accounts, credit cards, loan statements, etc.;
- any appraisals or other valuations for your property; and
- a budget of your average weekly expenses.
Weekly Expenses: Everyone has some weekly expenses that do not fit into the listed categories (e.g. cable, internet, netflix, etc.). Create a realistic budget for what you are spending regularly or your financial statement will not accurately reflect your financial situation and won't be as useful.
Assets: List anything of value that you may have interest in, even if there isn't a listed category for it (e.g. frequent flyer miles, or digital assets, such as the value of your iTunes library). In addition, it is advisable to list your marital interest in your spouse's property to ensure that you have reserved your rights to that property. This can be indicated by one line in the "Other" category: "Equitable Interest in Marital Property of Spouse - Value Unknown".
Trusts: Any trust interest (as trustee or beneficiary) should be listed with an explanation of the interest. Trusts are often misunderstood or misinterpreted and if you are not 100% clear on what your interest in a trust may be, you should consult an attorney regarding the terms of the trust.
Schedules: If you work for yourself, you must additionally complete Schedule A. If you own any rental property, you must additionally complete Schedule B. If these schedules don't match your most recent tax return, expect questions as to why. Judges are mandated reporters to the IRS and DOR, and you may be required to explain why the income and expenses you are reporting to the court doesn't match what you reported (also under oath) to the IRS and DOR.
How accurate do you have to be? Very Very Very accurate. Remember, you are signing your Financial Statement under the pains and penalties of perjury that its contents are complete, true, and accurate. If there are any inaccuracies or untruths, you may be asked about it in Court, which could hurt your credibility and therefore your case. In addition, any inaccuracies could affect the enforcability or modification of agreements.
Footnotes/Endotes: Sometimes the form doesn't allow the room for you to completely and accurately describe a specific situation. In that case, include a footnote or endnote and write an explanation at the end of the document. This is not a situation where less is more. Anything that is confusing or incomplete could be considered inaccurate or misleading.
Is a Financial Statement confidential? Financial Statements are impounded, which means that they are filed separate from your court file, which is public record. Your Financial Statement is only available to you, your attorney(s), the opposing party, and his or her attorney(s), after showing a proper ID. We recommend that when you file a Financial Statement, you redact all but the last four digits of your Social Security number and account numbers to ensure further privacy.