Five Things to Cover
When facing divorce, I recommend you prepare the following five items. These items are all inter-related, but essential for a divorce case.
1.) Bills
The bills are going to be the most important information to prepare if there’s going to be an alimony claim, or even child support. You want to be familiar with your bills. Child support is generally done by a child support guideline, but they do require that you file a Case Information Statement, which is a long, tedious financial document about everything you do from paying taxes to how much you spend on hair care. The court rules technically require that a judge use a Case Information Statement when determining child support, even though the guidelines are presumed to be accurate. But, if there’s a case that you’re going to be either deviating from the guidelines or there’s some reason that the guidelines are insufficient, you’re going to need the Case Information Statement. Your bills are going to be what make up the most important part of your Case Information Statement. The Case Information Statement will also be used to determine your lifestyle if there’s going to be an alimony claim.
As a divorce attorney I’m often shocked how often people will come in and have no idea what their bills are. Most of us have done enough Case Information Statements where we can assist you in estimating what your bills were, but you still need to find out and verify them. If you can, it would also be good to get copies of your bills so you can attach them to your Case Information Statement, so that when you are discussing things like child support and alimony you’ll actually have the documentation for it.
2.) Income
We want to know the income of both you and your spouse(s), past and potential future. Normally, we look at anywhere from five to ten years of income tax returns. If there’s a business, you also want to get those income tax returns because you need to figure out what business expenses that may be personal that are being paid out of the business. There may be depreciation that works as a deduction on your tax returns but doesn’t really cost, so it just reduces an income that may be reported on a tax return. You may need to actually adjust it upwards.
You also want to know, and be ready for if there’s any substantial change in the income in the past few years. There’s a concept called imputation of income, where if somebody’s voluntarily under-employed, the court can inflate the income back to what it should be. Now, if your spouse or the parent of your child has lower income than normal, then you need to be prepared to show why it should be imputed. If you are the person who’s not earning as much as you used to be, you want to be able to show why it should not be imputed, why you’re not voluntarily under-employed, which is the standard for it.
3.) Assets
You want to know the assets that you’re holding. First, you want to know the value and payoff of any loans. You also want to know whether it was purchased before or after the marriage, and the values that existed before and after the marriage. You also want to know the basic purchase price so that you can determine if there’s going to be any tax consequences or capital gains tax, for instance.
4.) Debt
You want to look at what your debts are. A lot of people will come in and have no idea, because one party handles the payment of all the bills, so they don’t know what their debts are. There’s often a claim on credit cards that maybe they were or were not marital expenses. There could be another person involved, like a boy or girlfriend and money is being spent. You want to be able to know what the debts are and go through the them. You want to make sure that they’re marital debts – they were incurred during the marriage and for purposes related to the marriage.
5.) Lifestyle and Future Changes
You want to have a general sense of what your lifestyle is. You want to be able to describe your lifestyle: not only just whether it’s lower, middle, or upper class, but you want to be able to talk about how often you vacation, how you bought cars, how you used and paid for credit cards, where you went to restaurants and entertainment. You want to be able to describe it, because while your Case Information Statement is going to itemize all these things, it won’t really give you the picture that you need to illustrate if there is either an alimony claim or a need to adjust your child support.
You also want to consider what your future lifestyle’s going to be like. Even though support’s not generally based on future lifestyle, there are going to be significant issues to determine, especially in child support cases. College is an obvious future consequence for children, but also consider changes in educational systems. You may have educational needs of your own if you’re in school and trying to further your education. If there’s alimony, there may be schooling or training that’s required for it to be terminated.
You want to see what changes you’re going to have in both yours and your family’s future so you can build these costs into your lifestyle. When you evaluate all these issues together, it gives the court a clear picture of what your needs are going to be.
