One of the most daunting tasks a lawyer can assign a client is the completion of a Form 8 Financial Statement (in the case of a Provincial Court action, this is called a Form 4 Financial Statement). The Form 8 Financial Statement is a summary of a person’s income, expenses and assets and is required by the BC Supreme Court Family Rules to be filed in every family law court action.
My experience as a paralegal over the past 10 years is that clients can become so overwhelmed at the thought of completing the form that they simply just don’t do it. This is not helpful for your lawyer, for the opposing counsel, for the courts or even for yourself. In the end, your lawyer will to have to force you to complete the Form 8 Financial Statement with them, something which will only increase your legal fees. Rushing to complete this form before a deadline is never a good idea because the chances are that you will forget to include something or that you will make an error. This will then result in you needing to redo the form and incur further expenses.
My goal in writing this post is to create a step-by-step guide that will assist you in completing an accurate and comprehensive Form 8 Financial Statement. One of the best ways to go about completing a Financial Statement is to give yourself at least one week to complete it. This will allow you time to gather documents, confirm banking information and compile a list of questions or concerns (that you will inevitably acquire during your review of the form) to go over with your counsel.
One important global tip before even starting to fill the Form 8 Financial Statement out is not to stress or bother with adding values together or doing any of the calculations required by the form. We have a computer program that will automatically do that for you once we have input the information. The most efficient way to complete the form is electronically as it is less prone to human error and saves you and your counsel time (and therefore money).
COLLECTION OF DOCUMENTS
First things first, collect all the supporting documentation for the Form 8 Financial Statement. Not everyone will need to attach the same documents so it is important to read the instructions printed on the form to confirm what documents are required in your situation.
Documents that everyone needs to provide are:
- T1 General Income Tax Returns for the three most recent tax years, including any and all attachments. These need to be full returns and not just summaries.
- Notices of Assessment or Reassessment for the three most recent tax years.
Other documents that you may need, depending on your personal circumstances, are:
- If you are an employee, your most recent statement of earnings indicating the total earning paid in the year to date.
- If you are receiving Employment Insurance benefits, your three most recent EI benefit statements.
- If you are receiving Workers’ Compensation benefits, your three most recent WCB benefit statements.
- If you are receiving social assistance, a statement confirming the amount of social assistance that you receive.
- If you are self-employed, you will need to provide the following for the three most recent tax years:
- The financial statements of your business or professional practice, other than a partnership, and
- A statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom you do not deal at arm’s length
- If you are a partner in a partnership, confirmation of your income and draw from, and your capital in the partnership for its three most recent taxation years.
- If you control a corporation, the following for the corporation’s three most recent taxation years:
- The financial statements of the corporation and its subsidiaries, and
- A statement showing a breakdown of salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation and every related corporation does not deal at arm’s length.
- If you are a beneficiary under a trust, the trust settlement agreement and the trust’s three most recent financial statements.
- If you own or have an interest in real property, the most recent assessment notice issued from an assessment authority for the property.
PART 1 – INCOME
Parts A and B of the income section are relatively straightforward. You will simply need to tick the appropriate boxes in those sections and complete any employer information that may be required under Part A. Part B requires you to check off which documents you are attaching to the form.
For Part C, you will need to input your annual income amount in the appropriate field. Usually you can find this number at line 150 of your most recent tax return. You and your lawyer will need to discuss whether or not your particular situation requires you to determine and/or list the income in another manner.
If you find completing Part 1 of the form confusing, don’t stress. This can be completed with your lawyer once you have completed the other sections of the form.
PART 2 – EXPENSES
While the income in Part 1 is listed in annual amounts, the expenses under Part 2 are monthly amounts.
This part of the form is very similar to something that you would complete for a personal budget. All expenses can vary from month to month. Use an average amount for expenses that can fluctuate. With respect to yearly expenses (property taxes, insurance etc.), take the yearly expense and divide it by 12.
Try to be as accurate as possible, and estimate rather than omit but make a note of the basis for your estimates. Work from actual bills, receipts, online bank and credit card statements. It can help to print off the statements and put them in a binder for easy reference.
If expenses are necessary but are not being paid because funds are not available, insert the appropriate amount and mark the amount with an asterisk*.
It will become immediately apparent when your counsel auto calculates the numbers whether or not you have an accurate depiction of your expenses. If your annual income is $50,000 and your annual expenses are $100,000, then you will likely need to go over and confirm the information that you have provided.
PART 3 – PROPERTY
Under “Real Property” (which means an interest in land or housing), list all of the real property in which you believe you may have an interest or obligation, even though that asset or debt may not be registered in your name. Provide values using your best estimate of what the asset would bring if sold on the open market as at the date you are filling out the form (normally this is not the purchase price). This may simply be your best guess or the amount on the most recent years’ BC Assessment. If necessary your counsel can establish more precise values at a later date. It is helpful to your lawyer if you note how you are arriving at the value that you input.
Under “Financial Assets”, list all bank accounts held in your name alone or jointly with anyone else, all financial investment accounts, all money owing to you as an Account Receivable, (whether it is business or personal), and if you have life insurance please indicate whether it is term life or whole life.
Under “Other”, it is not necessary to itemize all household furnishings and equipment. However, you should itemize any single item value having an estimated sale value greater than $1,000.00.
You should indicate if any of the listed assets were acquired:
- Primarily from funds received by inheritance or gift
- Since the date of separation, or,
- Before the marriage (and how long before).
Under “Secured Debt Details”, briefly describe each secured debt (meaning a debt which is registered against something that you own, such as a mortgage on a house, or a secured line of credit etc.),
Under “Unsecured Debt Details”, briefly describe each unsecured debt such as credit cards, student loans, loans from family members etc. If you are not sure about whether a particular debt belongs in this list, include it anyway and let your lawyer decide whether it is appropriate.
Any debt listed should show the balance owing. You should also list the amount of monthly payments in the Expenses section (Part 2).
Under “Disposal of Property”, briefly describe all property that you have disposed of during the relevant time (e.g. vehicles, RRSPs).
Documents relating to Part 3 to provide to your counsel:
- All statements of account for the period of six months prior to the date of separation up to and including the current date for the following accounts:
- Chequing and savings accounts
- Term Deposits
- Mutual Funds
- Line(s) of credit
- Loan(s), and
- Credit cards
- Any and all most recent statements of account for the following accounts:
- Canada Savings Bonds, and
- Insurance Policies.
While you are not necessarily going to attach these statements to the form (you will, for example likely not attach any of the bank statements) they will assist you in ensuring that the content of the form is comprehensive and accurate. The documents also serve as confirmation of your information in the case of contentious legal proceedings. Basic documents such as bank statements will likely need to be provided to your counsel in any event, so you might as well try to get ahead in an already time consuming game.
Depending on your circumstances, you may be asked to provide your counsel with documents outside of the scope noted above. This is something that will need to be discussed and determined between you and your counsel.
PART 4 – Special/Extraordinary Expenses
Certain kinds of expenses for a child are almost always special expenses (e.g. child care expenses, medical/dental insurance premiums attributed to a child) and others may or may not be special expenses (e.g. expenses for extraordinary extracurricular expenses). Please list these expenses and the monthly gross cost for each expense that you believe should be shared regarding a child. Where possible provide receipts verifying the expense and specifics of the expense. If you claim child care and you receive a subsidy then list the total cost of child care and the total subsidy you receive in respect of child care.
If you are claiming extracurricular expenses, please provide a list of activities for each child and the approximate gross cost of each activity. If there is an activity you want the child to participate in but you cannot afford the cost of the activity, please provide that information as well.
PART 5 – UNDUE HARDSHIP
The concept of “undue hardship” has a very specific legal meaning which is beyond “having financial difficulty”. If you have any questions regarding that matter you will need to discuss this with your counsel.
PART 6 – INCOME OF OTHER PERSONS IN HOUSEHOLD
The income of another person in your household normally, but not always, relates to an adult spouse (common law or otherwise). However, in most circumstances the income of another adult person in your household is not relevant to the issues. When you meet with your counsel you can discuss whether the income of another person in the household may be a factor in your case.
- Keep track of questions or concerns regarding the Form 8 as you are going through it. This will make sure you don’t miss anything when you meet with your lawyer to finalize the form.
- Be as organized as possible. Not only will this save you a few extra grey hairs, but it will also decrease your legal expenses in the long run, as well as help keep your matter moving forward.
- Legal Assistants are a great resource and are much less expensive than a lawyer. If you are really stuck or simply need a hand going through and completing the form, contact your counsel’s legal assistant and see if you can set up an in person (or even over the phone) meeting to go over the form with them.
- Be truthful and honest when completing the form. Providing false information to the courts and opposing counsel will eventually find its way back to you. This will only cause a delay in matters and of course, extra expenses!
Finally, remember that your lawyer and the legal assistant are available to help you with any questions or concerns that you may have related to your Form 8 Financial Statement.
*Nicole Aren has 10 years experience as a family law paralegal and she is the National Firm Manager at Henderson Heinrichs LLP.