How to Prepare a Financial Statement

Knowing how to prepare a financial statement is a highly valuable skill, whether you are running a small business, filing taxes, or applying for divorce. A financial statement is a complete record of all financial activities of a person or business.

A complete financial statement is crucial for a straightforward Family/Divorce Law Case. Without a thorough financial disclosure, the court may set aside an Order or Agreement.

A family law firm can be essential in helping you prepare your financial statement and disclosure brief. Professionals can establish the difference between a complicated case and a relatively dexterous case.

There are important questions that a lawyer should keep in mind when preparing a financial statement:

• Which Form– Knowing which form to use for a financial statement is critical to have an accurate record of finances. For instance, if there are property issues involved, you should use the Form 13.1. This is the form commonly used in the Ontario Superior Court of Justice. If there are support claims but no property issues, then instead use Form 13, which is used in the Ontario Court of Justice.

• Income/Benefits – You should review a T4 and three recent pay stubs. If you are paid weekly, multiply that figure by 4.33 to obtain the monthly payment figure. If you are paid biweekly, multiply that figure by twenty six (26) and divide it by 12 to get that monthly amount.

• Self-Employed – Use Income Tax Return filed the previous taxation year (line 150). Include in the form an explanation as to how income was calculated for financial statements.

You should also gather details of both taxable and nontaxable sources. Verify that the sources are reflected in the asset section of the financial statement. For example, if you earn interest income. Ensure that the host bank account that generates the interest income is included. In addition, include a value (or an estimate) of all employment benefits received. This includes company car, health benefits, or club membership.

Expenses

Organize all receipts, and review the following documents from the last twelve months:

-Bank statements
-Credit card statements
-Property tax statements
-Mortgage statements
-Utility statements
-Insurance documents
-Pay stubs (deductions from income), etc.

Assets

List all owned and possessed property for an accurate record. All jointly owned property should be listed as a 50% interest. Make sure that any figures in the financial statement are consistent with the pleadings. If the matrimonial home was owned on the date of marriage as well as the date of separation, there is no date of marriage deduction for the value.

Debts

List all debts from the date of marriage through the date of separation, and include the present value. If any debt is owed jointly, record 50% of the total debt.

You should include all contingent or future debts. This includes taxes, notional costs of disposition, capital gains, etc.) in the financial statement. Retaining an actuary or CBV may help to accurately determine the tax liability. If this is unknown when you draft the financial statement, write “TBD” and an explanation. You should also consider a discount for some debts. For example minority discounts, the current value of any future payment, etc.

Excluded Property

If there are any excluded properties, the total value of the property is included in the property section and then deducted in the excluded section.

Keep in mind that the Family Law laws require that a financial statement be updated regularly. If the statement is older than 30 days, you must:

-Serve a new financial statement
-Swear an affidavit that there have been no changes
-Or set out the changes.

Take the step towards your new life, Fine & Associates has the most experienced Toronto Divorce Lawyers and Family Lawyers for you.