How Do I Fill Out My Net Worth Statement? – Part V – The Final Chapter
A Statement of Net Worth (a/k/a “net worth statement”) is required to be exchanged in all contested divorce actions and in some uncontested divorce actions as well. In Part I, I gave you some tips on how to fill out the “family data” and “expenses” section of the form. In Part II, I gave you my thoughts on completing the “income” section. In Part III, I took you through the “assets” portion of the form. In Part IV, we moved on to completing the “liabilities” section of the form. In this post we’re in the home stretch, the final portion of the Statement of Net Worth, composed of “support requirements”, “counsel fee requirements”, “accountant and appraisal fee requirements” and “other data”.
Once you have completed the liabilities section of your net worth statement it’s time to take a step back and reunite with your attorney. The rest of the net worth statement gives you the opportunity to inform the court of the marital financial “status quo” (defined as “the existing state of affairs”) with respect to support and legal fees being paid or needed to be paid. It also gives you an opportunity to tell the court what you think you will need to be done in the future, at least with respect to the economic aspect of your case. Let’s take the sections one-by-one.
SUPPORT REQUIREMENTS – In this section you are stating what’s going on now regarding support (if you used the date your divorce action was commenced as the date for your assets and liabilities, you should still use “now” for this section). If you are paying or receiving support, either child support, spousal support, or both, it should be listed. You need to specify whether the support is being paid or received. Next you need to specify whether the support is pursuant to some court order or is being paid voluntarily. If one spouse is paying certain bills like the mortgage, credit cards, cell phone bills, etc., it should be explained. If one party is supposed to be making support payments, but isn’t, or has fallen behind, it’s time to take out your calculator and figure out exactly what is owed. You should specify the amount and say when it is “as of”.
If no support is being paid or if you think the amount being paid is inadequate, you need to specify the amount you feel is appropriate. Obviously, that’s a big decision and must be made mindful of your spouse’s available funds and your reasonable expenses. In my experience, this provides a good opportunity to take a step back and to really examine what your reasonable expectations should be. You should consult with your attorney on this figure. A number too high may make you appear unreasonable. A number too low may come back in the future to haunt you.
COUNSEL FEE REQUIREMENTS – Hopefully you have an attorney and you already have executed a retainer agreement. In New York, retainer agreements are submitted to the court along with the Net Worth Statement so there are no surprises. Your spouse will see what you have paid your attorney and what he or she charges. You will get to see what they paid their attorney and what their attorney charges. Retainer agreements are governed by statute in New York and they tend to appear similar. In this part of the net worth statement you need to disclose the financial relationship you have with your own attorney…. Did you pay a retainer? How much? Did you borrow money to hire your attorney? If so, I recommend that you note that in this part of the form as well as in the liabilities section. If you are asking the court to compel your spouse to pay for all or a portion of your attorney’s fees, you need to indicate that here as well (and will likely have to make a motion seeking this relief).
ACCOUNTANT AND APPRAISAL FEE REQUIREMENTS – In many divorces there may be assets (and sometimes liabilities) that need to be valued by an expert. For example, the value of a business, real estate, investments, pensions and retirement accounts, intellectual property and “things” like jewelry, paintings, coin collections, furniture, fur coats, cars and boats. In New York, if you or your spouse earned professional licensing, obtained any college or graduate degrees or received any specialized training that may have allowed you to earn more money than when you got married it is considered a marital asset and is referred to as “enhanced earning capacity” and needs to be valued. Almost all appraisals cost money and in this portion of the form, you and your attorney need to describe the types of valuations that will be needed and you should estimate what the cost will be to do this. An experienced divorce attorney should have an idea of what typical appraisals cost or should be able to find out.
OTHER DATA – If there is something you want the court to know about your net worth statement or you marital finances in general, here is where it goes. For example, if your spouse has all the financial information and has not made it available to you, you should indicate that here.
CLIENT CERTIFICATION – When you sign your Statement of Net Worth you are certifying under oath that what you have listed is true and accurate to the best of your understanding. You are also certifying that you provided all the information used in the form and that you haven’t left anything out. This is important. If your case proceeds in a contested manner you might be questioned at a deposition. Invariably, you will be asked how you prepared your net worth statement and what documents you relied upon. It’s no fun to squirm when asked these questions if you didn’t do your homework and didn’t keep records. On the other hand, if you prepared your form carefully and kept good records, you will come across credible, which may help resolve your case.
Incidentally, your attorney must also certify that they have no actual knowledge that anything in the net worth statement is false or frivolous. You are very much in this together so it’s important that the document be truthful and accurate.
FINAL THOUGHTS – The Statement of Net Worth is perhaps the most important document you will have to complete in your divorce. It also will likely take you the most time to do. Do it carefully and keep track of where you get the numbers from, saving receipts, statements and back up. Very often the completion of the Net Worth Statement is also an educational experience. It forces you to see an accurate picture of your marital finances, which is a good thing. It is also the blueprint for your divorce. As I stated in my prior article, do your homework and don’t be afraid to pick up the phone or go on-line to get up-to-the-minute information. Sometimes it’s a pain to do, but don’t rely on your attorney or a paralegal to do this for you unless you are prepared to pay for their service (and sometimes only you will be able to get the information anyway).
A PARTING TIP – If, during the course of your divorce, there is some dramatic change in your financial condition, like you lose your job or you hit the lottery, it’s generally a good idea to update your net worth statement and serve an amended one so no one can accuse you of withholding information as it happens.
Hope this helps!