In this season of spring cleaning, the LA County Courts have introduced two procedural changes to expedite enforcement of existing rules and empower parties throughout the divorce process. Here, we discuss what these changes may mean for clients navigating divorces.
UPDATE #1: Orders to Share Financial Information
As discussed in earlier editions of As It Happens, spouses have a fiduciary duty to provide complete and accurate information regarding any transaction involving their community property upon request. This duty applies both during marriage and divorce - in California, spouses must disclose all separate and community income, expenses, assets, and debts within 60 days of service of their Petition or Response, and are required to continually update this information while the proceedings are pending. Failure to do so can lead to a variety of penalties and sanctions, including forfeiture of some or all of the undisclosed asset(s), and payment of the non-breaching party’s attorney’s fees. Full and timely disclosure of the totality of a party’s financial picture is crucial in determining whether and in what amount the parties will owe support and/or attorney’s fees, and the need for/extent of the discovery required.
Consider the example of Jane and Tom, who have been married for 21 years, and share two minor children. Jane - who was the sole earner in the marriage and exclusively controlled the parties’ finances - files for divorce from Tom. Within days of filing, Jane cuts off Tom’s access to all their shared accounts.
In order to have an accurate understanding of the assets available to him for spousal support, child support, and attorney’s fees, Tom will need to see Jane’s Income and Expense Declaration. Additionally, while Tom knows Jane owned multiple companies and had a large, diversified investment portfolio, he doesn’t have any details about the amount and locations of their community assets. In order to determine the amount of discovery his attorneys have to do, and whether he needs to hire any experts, a forensic accountant for example or a business or real estate appraiser, Tom will need to see Jane’s disclosures. A review of the disclosures will help Tom and his legal team understand what Jane claims their community or their separate estates consist of.
Before mid-May 2018, if Jane failed to meet her 60-day deadline, Tom would have to first submit his own disclosures, then submit a formal request for Jane’s within a certain period of time. If Jane still refused to submit her financial documents, Tom could file a motion with the Court asking it to order Jane to do so, and further request that she be sanctioned for noncompliance. Starting in May 2018, whenever a petition for divorce, legal separation, or nullity of marriage is filed, the Court will issue an Order to Share Financial Information. If a party doesn’t file their financial disclosures within 60 days of filing either their Petition or Response, this new order empowers the Court to sanction them immediately (note: the money collected from such sanctions is payable to the court, not the opposing party). Not only does this new order save the party requesting disclosures time and effort, it acts as an incentive/motivation for both parties to disclose at the outset.
UPDATE #2: Orders to Share Financial Information
The second modification has to do with Requests for Order, more commonly referred to as “RFO”s. Once a proceeding for divorce, separation, or nullification of marriage has been initiated (i.e. once one party has filed a Petition and the other party has filed a Response), either party may file an RFO to request a formal order from the court that will control some aspect of the parties’ relationship for the duration of the legal proceedings between them.
Under the new rule, whenever the first RFO is filed in a family law matter (with the exception of requests for Domestic Violence Restraining Orders), the Court will issue an Order for the parties to participate i a Family-Centered Case Resolution Conference, and schedule said conference for the same date as the hearing for the RFO. Prior to the conference, the parties or their attorneys will be required to discuss the entire case in detail (including settlement proposals) either in person or over the phone. Then, at the Conference, the Court can attempt to facilitate the settlement of the case, or make orders for how the case will proceed. The Court will also provide the parties with a Divorce Checklist, which lists some of the common issues in divorce cases and where to find the information the Court typically wants to see before making decisions on those issues. One of the issues highlighted on the Divorce Checklist is the issue of real property division, one that arises in nearly every divorce case. In addition to pointing out the issue, the Checklist notes that the Court will want to see copies of title papers, the most recent mortgage statements, and an appraisal from a licensed real estate appraiser before making a ruling on division of the property.
To understand the practical effect of this new rule, consider the example of Heidi and Chris: In June, Chris files for divorce from Heidi, and moves out of the family home. The two spend the summer shuttling their young son between summer camp, friends’ houses, Heidi’s house, and Chris’ new residence. However, in August, it occurs to Heidi that it may be useful to have a more concrete schedule in place during the school year, so she files an RFO, requesting a formal determination of custody for the remainder of the pending divorce action. Under the old system, the Court would schedule a hearing during which only the matter of Heidi and Chris’s temporary custody arrangement would be discussed and ruled upon. Now, when Heidi files her RFO, the Court would schedule not only the custody hearing, but the Case Resolution Conference as well. While it may be that in that moment all Heidi and Chris are concerned with is where their son is going to be the first months of school, they’ll now also have to discuss support and division of their community estate, any reimbursement and tracing issues. Heidi and Chris are now required to start collecting information about and discussing every aspect of their divorce case from the outset. Even if all their issues aren’t resolved at the Case Resolution Conference, the door has now been opened for a conversation about their entire divorce. It remains to be seen whether this rule will tend to expedite the divorce process by motivating parties to be informed or will more often increase the cost of litigation by mandating the parties to address all other issues instead of focusing their efforts on the one before the Court.
While these additions and modifications can have a major impact on the cost, strategy, timeframe, and outcome of your divorce. To find out more about how these rules may affect the landscape of your divorce, visit our website at zitserlaw.com, or call us at (310) 948-6461 or (818) 763-5274 to schedule a consultation.