Understanding Financial Statements in Family Court

Most people don’t necessarily think of financial matters as being the most critical in family law cases but much of divorce for you and your spouse will hinge on matters related to your finances and other money-related subjects. A wise person once told me that a divorce is a business transaction when you get right down to it. Take away the emotion and the heartache and you are dividing up things just like you would during a business liquidating its assets before going under. This may not be the most palatable way to look at it but on some levels it is true.

Spousal maintenance

Court-ordered spousal maintenance is an issue frequently discussed in divorce cases where the parties were married for more than ten years. This is the minimum length of time that a marriage must have lasted before post-divorce spousal maintenance is considered by a court. Texas does not have alimony like you may have heard about in so many other states. We hear from time to time about divorce courts in different states awarding alimony to a spouse- many times the paying spouse is someone rich and famous. However, in Texas, we don’t have alimony like in those other states.

On the contrary, in Texas, we have something called spousal alimony, which is like alimony, but it differs in some regards. Spousal maintenance can only be ordered by a family court judge. Therefore, you must proceed to a divorce trial to have it ordered in your case. You can still negotiate for post-divorce spousal support with your spouse, but it would be called contractual alimony. The two of you are free to negotiate on this subject but there is no requirement that you agree to anything specific when it comes to post-divorce spousal maintenance.

Spousal maintenance can only be ordered by a judge if you have been married to your spouse for at least 10 years or you have been the victim of domestic violence where your spouse was found guilty within the past two years. In those circumstances, a judge can order spousal maintenance with a limit of twenty percent of their gross monthly income going towards maintenance. On top of that, you need to be able to prove that you cannot meet your minimal basic needs with maintenance. This is a tough one for many people to prove and sheds some light on why financial statements are so important when it comes to determining spousal maintenance awards.

To show a judge that you should be considered for spousal maintenance you need to be able to produce evidence. A financial statement showing your monthly bills and your income is a good place to start. For example, if you can show a judge that your current income (if any) does not equal more than your rent, grocery, and insurance payments then you are in a good position to win spousal maintenance assuming that you and your spouse have been married for at least ten years. The clearer you are in the documents that you produce the better off you will be. The less a judge must scratch their head as to the meaning of something the more likely you are to win on this request.

One final thing that I will mention to you is that minimal basic needs do not equal living the lifestyle to which you had become accustomed. If you are used to vacationing, eating, and living like a person who has a $250,000 household income you may need to adjust your expectations now that your household income is less than that. Again, I think the movies have some people fooled into thinking that you can ask for spousal maintenance to continue to live a lavish lifestyle. That may be true on the silver screen but in Texas that won’t fly. Judges are hesitant to award spousal maintenance. They would rather, for instance, award a disproportionate share of the community estate to the spouse in question who needs financial support. So, you need to have all your ducks lined up just to win a spousal maintenance award in a trial.

This is more reason to have an experienced family law attorney by your side as you attempt to win spousal maintenance. We just talked about how it is not easy to win spousal maintenance. You must be in need, be prepared, have good enough evidence, and then be prepared to present that evidence convincingly. An attorney with the Law Office of Bryan Fagan has been there and served many clients in these exact circumstances. When every dollar counts in your divorce you need experienced and caring lawyers there who can advocate for you and not back down. Contact us today so we can speak to you for free about your case and your options.

What goes into a financial statement for a divorce?

You will need to disclose your assets first off. Assets are any property that you own. Assets are those that can be sold to help you keep your head above water in the period immediately following your divorce. When we talk about assets we can think of big valuable things as well as smaller investments and personal items that may be of value. The more detailed you can be, the better. If you leave this information out, you may find out that your spouse will ask you to supplement the financial statement with a listing of more detailed information regarding your assets. This is more work for you and likely more you must pay your attorney to fulfill this request.

Your liabilities or debts are also going to be relevant here. If you have assets that are all well and good but if those debts are something that will cancel out those assets and their value that is another subject altogether. The more debt that you have means the more payments you will have to make each month. This severely cuts into your take-home and will impact your ability to pay or receive temporary spousal support during the divorce.

A basic run-down of income and expenses for both you and your spouse will be submitted to the court. This is an income/out-go worksheet that will show the judge where you all fall when it comes to disposable income, budgeting, and a general financial landscape. From this information, a judge will be able to determine where the two of you are when it comes to finances and the needs of your family to make it through the divorce considering whatever bills you all have. Additional expenses like doctor’s visits for kids, medications, school tuition, etc. will need to be listed. The more thorough you can be, the better you will be able to negotiate with your spouse and educate your judge on the circumstances that you and your family are facing.

Financial statements and child support

One of the most fought-over issues in all of Texas family law is child support. The idea that one parent must pay the other parent money to take care of their children is a huge hurdle to get over from a mental standpoint. If you are going through a divorce case then the last thing that you probably want to do is pay your ex-spouse what may end up as a lot of money in order so that she can better care for your children. In a perfect world, you would be the one to care for the kids. Now, you are having to shell out money to your ex-spouse and you don’t know exactly how that money is being spent.

This is the backdrop that many parents face as they consider child support in a divorce. Even if you are the spouse who will be receiving the child support it is not always easy to rely upon your ex-spouse for financial help. You would, in many ways, just as soon sever that relationship completely and not have to rely upon him any longer for much of anything. However, just because your marriage is ending does not mean that you will not have a relationship with your spouse moving forward. On the contrary, your co-parenting relationship will persist despite the divorce. Now is the time to get a handle on these financial matters so that they do not begin to bleed over into your relationship with your children or with your ex-spouse any more than they already have.

The best I can do to frame this discussion is to approach the subject matter from the perspective of both parents. If you are the parent who is receiving child support, then you probably feel like you are spending much more money on the kids and that the child support you receive is not enough to even the playing field between you and your ex-spouse. On top of that, you may make less money than your ex-spouse which only adds insult to injury.

On the other hand, if you are the parent who pays child support, we have already talked about how you could feel like this money is being sent to your ex-spouse each month but you have no idea where it is being spent. Your ex-spouse may even ask you for money on top of what you already paid her. The entire scene is a setup for both of you to potentially have negative emotions regarding the entire situation. It is difficult to overcome those emotions to be able to look at the situation objectively.

In Texas, the family court judge would likely look to a guideline for child support as outlined in the Texas Family Code. The guidelines use a formula to determine child support based on the parent’s net monthly income and a percentage based on the number of children under 18 that are currently before the court. The number of children before the court is not a difficult number to calculate or quantify. What can get tricky is the other part of the equation, namely, being able to determine the paying parent’s net monthly income.

To do this you may need to collect pay stubs, IRS tax returns, and other financial documents to verify your or your spouse’s income sources. Many people have contract jobs, self-employment, and other non-salaried opportunities for work that augment their primary source of income. When it comes to these types of income sources it is important to be thorough.

If you are the spouse who will be paying child support, then you need to remember that it is your children where this money is going. As such if you decide to hold back on the income side of things you risk putting them in a bad spot financially. On the other hand, if you are the spouse who will be receiving child support then you must get this one right due to your needing that money to live. Remember that you do not need to show your receipts as far as where or how the money is spent. You can spend the money on whatever you believe is necessary. Therefore, it makes sense to put your children in the best position possible to be able to receive what they need in life. That means you and your attorney digging deep to receive the correct amount of child support.

The information that we have been discussing regarding child support is typically produced in a financial affidavit that will need to be submitted to the judge before any major hearing in your case. All of the information in the affidavit needs to be accurate. Keep in mind that an affidavit is a sworn statement under oath. The statements you make in your affidavit should be treated the same as if you were giving those statements to a judge in the courtroom. There is no room here for speculation. You will want to make statements that you know to be true and can be proven with evidence if you are called upon to do so.

As we mentioned earlier, the more backup evidence you have in this regard the better it will be for your team. This is information that you will need to exchange before a hearing even if you and your spouse do not exchange discovery. Paystubs are a basic document that will need to be turned over to the court and your spouse. Detailing your rate of pay, hours worked, salary and other compensation will help everyone get on the same page as far as your finances are concerned. Unless you both know what is being earned by one another there is no way that you can negotiate on subjects like spousal maintenance or child support. To think that you could do so would be a mistake. Many spouses do not discuss financial matters which is why it is so crucial for the two of you to exchange this information in your divorce case.

There are a host of other types of benefits beyond your income that you or your spouse may earn. These may not be income in the traditional sense but they may be sources of money that greatly help you and your family make ends meet on a month-to-month basis. Examples of these types of benefits include unemployment, disability, worker’s compensation, or any other financial assistance payments from the government.

Your income tax returns are the ultimate source of discovering income sources that you may not have even known about when it comes to your spouse. While he or she could very well not be paying taxes on side income, most people will pay taxes on their income. Many times, you will need to request these documents from your spouse in discovery.

The home mortgage statements are important to provide your spouse with if he or she has not been involved with paying the mortgage. Again, spouses who go through a divorce typically are not good at communicating with one another. This is not me being judgmental. Rather, I’m just telling you how things go based on my experiences as an attorney. I have seen mortgage payments each month equal 50% or more of a couple’s take-home pay. If the family had wondered, why there were so many problems in paying bills then this would be an easy explanation as to why that is.

These are just a handful of the financial issues that you need to be able to plan around in your divorce. Of course, your specific situation may vary somewhat from the ones that we have described in today’s blog post. If you have any specific questions about what you have read here today, please do not hesitate to contact the Law Office of Bryan Fagan

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