What is a Financial Statement?
A Financial Statement is a court document that contains information about a person’s income, expenses, assets and debts. During the process of separation or divorce this document will be exchanged between the parties’ in order to help determine support payments (child or spousal) and the division of assets and debts, if applicable. This document is completed based on your financial disclosure and must be as accurate as possible. The Financial Statement is a major tool to resolving family law issues and may be required even in cases that don’t go to court. For this reason, we have prepared some tips on completing this document as effectively as possible.
Which Financial Statement will I need to complete?
The first step is knowing which type of financial statement to be completed. If there are claims for support, but no division of property, you will complete Form 13. If your claims include division of property, along with support issues, you will need to complete Form 13.1.
What information do I need to complete my Financial Statement?
Financial Statements must disclose a person’s accurate financial situation and can be summarized in three major categories: income, expenses, and assets and debts.
In this section you will need to disclose information regarding your sources of income. The following documents will need to be served along with the Financial Statement: Notice of Assessment from the past three years and proof of income.
The law requires these documents in order to determine the support obligations and to confirm that the assets you disclose are consistent with your income.
A common mistake is providing a tax summary or providing incomplete documents. It is very important to provide the correct documents and ensure that they are not missing any pages. Otherwise, it may not be accepted by court staff and may cause delays.
The tax documents, which are your Income Tax Returns and Notices of Assessment, can be easily obtained from your accountant or the Canada Revenue Agency (CRA). The most efficient way to retrieve these documents from the CRA is to obtain them from your online account. If this is not an option for you, the alternative is to call them directly and request an option C printout. You should take this opportunity to confirm that your personal information is accurate and up to date.
The proof of income will depend on your employment status. It can be disclosed by providing your most recent paystub, a pension statement, a Record of Employment, if unemployed or a statement of income. If you are self employed, a sole proprietor or corporate entity, you will be required to provide additional documentation to determine your income for support purposes. Refer to Sections 21 (d), (e) and (f) of the Child Support Guidelines if this is the case. If your income fluctuates, provide multiple paystubs so that an average income can be determined.
You will also have to disclose other sources of income, including spousal support from previous marriages, interest from investments, rental income etc. You can refer to your last income tax return for this information.
When disclosing your expenses, do it to the best of your knowledge and keep in mind that it does not have to be exact but a general approximation of your monthly expenses.
This information is used to determine your lifestyle for the purposes of support obligations.
Be attentive to the fact that it requests monthly amounts. Expenses that are incurred on an annual basis, such as vacations, will have to be divided by 12 to obtain the monthly amount.
Assets and Debts:
In these sections of the Financial Statement you will disclose information regarding your assets and debts, including land, bank accounts, loans, valuable items, vehicles, pensions and life insurance. If completing Form 13.1, the information will need to be disclosed in reference to the following dates: date of marriage, valuation date (date of separation) and on todays date.
This information is relevant in calculating your net family property and for division of assets and debts.
Many people are unaware of the fact that they must also disclose information regarding assets and debts, owned solely and jointly with their partner, including those outside of Ontario. Although you will have to disclose joint information, such as bank accounts and properties, you will only include the portion that you own. For example, if you and your spouse own a joint savings account together, with a closing balance of $500,000.00, you will only include $250,000.00 on your Financial Statement.
The bank account balances can be easily obtained through online banking or by visiting your branch. Obtaining a balance summary of multiple accounts is a time-saving strategy.
Financials Statements may seem daunting however, we have an experienced team to ease this process for you. At Rodrigues Paiva LLP, our goal is to simplify the legal process for our clients. We provide a detailed outline of the disclosure requirements, along with clear instructions on how they can be obtained and whenever possible, we make ourselves available to retrieve documents on our client’s behalf. Contact our office for assistance.
This article is for information purposes only and is not legal advice. Please contact José Bento Rodrigues for more information about financial statements or if you require assistance with a separation or divorce.