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New Jersey divorce articlePREPARATION
OF Presented
By: Charles
F. Vuotto, Jr., Esq. 2000 INTRODUCTION
It is
very often the case that the results of a pendente lite application in a matrimonial litigation will set the
tone for the rest of the case and may very well effect the ultimate outcome.
If an unequal or unfair result occurs early on in the case, it could
spell disaster to one party. It
is usually through pendente lite motions that the judge who will likely be assigned to
the matter, will first become familiar with the parties.
This will also be the first time that the judge will learn the
critical facts regarding the parties’ marriage, separation, children and
other critical facts relevant to the dissolution proceedings.
This first impression is one of the most critical aspects of any
matrimonial litigation. APPLICABLE RULES
It can
never hurt to review some of the applicable Family Part Rules of Court that
control matrimonial matters. Here
is a summary of some key rules that are particularly relevant to pendente
lite motions: · R. 5:3-5 Attorney Fees & Retainer Agreements · R. 5:3-7 Remedies for Violation of Orders for Parenting Time, Alimony or Support · R. 5:5-2 Case Information Statements · R. 5:5-4 Motions in Family Actions · R. 5:6A Child Support Guidelines · R. 5:6B Cost-of-Living Adjustments for Child Support Orders
A brief review of these rules will assure that the requirements of a pendente
lite motion are met (e.g., page limts under R. 5:5-4(b), filing due
dates under R. 5:5-4(c) and Notice requirements under R. 5:5-4(d)). CASE
INFORMATION STATEMENTS
Remember, with few exceptions, R. 5:5-2 requires that a Case
Information Statement be filed in every contested family action within 20
days of the filing of an Answer or Appearance.
The CIS must follow the form in Appendix V of the Rules.
Parties must amend their CIS’s as facts change.
Therefore, there are very few instances, if any, when it is not
appropriate to attach a completed CIS to a pendente
lite motion. CONTENTS OF PENDENTE
LITE MOTIONS
Although the contents of a pendente
lite motion are fact sensitive and will change from case to case, there
are certain common themes that are routinely seen.
It is good to know the general areas that may be addressed in such a
motion so that they are not forgotten when preparing your application. · Temporary Custody and Time Sharing Issues; · Restraints on the dissipation of assets; · Payment of direct expenses for Shelter (Schedule “A”) and Transportation (Schedule “B”); · Direct Support (Alimony and/or Child Support) (Don’t forget to address the taxability of any alimony or unallocated payments); · Maintenance of medical and life insurance; · Payment of unreimbursed health care costs; · Payment of marital liabilities; · Sole possession of marital home; · Sole possession of certain vehicle(s); · Maintenance of other assets (e.g., rental or shore properties); · Production of discovery (if requirements of R. 1:6-2(c) have been met); · Appointment of Experts and Payment of their fees ·
Counsel Fees (both as to the motion and a pendente
lite award)
Although this is certainly not an exhaustive list, it will certainly
provide a fine outline around which a comprehensive pendente
lite motion may be prepared. MARITAL HISTORY
Before
an attorney can effectively represent a party in a divorce action, it is
critical that he or she know as much as possible about the parties, their
relationship, children, assets, liabilities and interactions with each other
and other people. Certainly, an
effective pendente lite
application cannot be prepared unless the attorney is adequately educated as
to all relevant facts concerning the client.
In order to educate the attorney, a “Marital History” should be
prepared with the client. This,
in conjunction with the statutory factors and Marital Lifestyle to be more
fully detailed below, will provide an extensive amount of information to the
attorney to allow him or her to effectively represent the client in all
aspects of the matrimonial litigation including, but not limited to a pendente lite application. Attached
hereto as Exhibit “A” is an outline which can be used in preparing such
a Marital History with the client. STATUTORY FACTORS
Since
this is the first time that a client will have what he or she perceives as
an opportunity to tell his or her side of the story to the court (other than
the Complaint or Answer and Counterclaim), there is a tendency on the part
of attorneys, paralegals and clients to infuse pendente
lite applications with unnecessary emotional and irrelevant issues.
In light of recent changes in the Rules of Court imposing page
limitations, such irrelevancies have been eradicated out of necessity.
However, whether or not you are able to fit a client’s emotional
outpouring into the page limitations, it should be avoided.
Rather, in its place, emphasis should be placed on the statutory
factors that a court will ultimately need to consider if the matter is
tried. It is these statutory factors which should be the focus of
initial client interviews and pendente
lite certifications. Attached
hereto is a useful checklist which can be utilized to gather all pertinent
information with regard to the statutory factors relative to custody,
equitable distribution, alimony and child support.
(Exhibit “B”).
Judges are huge fans of the saying “less is more”.
Although it is often difficult to avoid the temptation to throw in
everything but the kitchen sink, very often this will turn a judge off.
Rather than pages and pages of text, judges are more swayed by cold
hard facts backed up by supporting documents and other proofs. MARITAL LIFESTYLE
Over the
last two decades, the Marital Lifestyle has been a critical issue in any
divorce case. The most recent
pronouncement from our Supreme Court embodied in the case of Crews v.
Crews, 164 N.J. 11 (2000), decided May 31, 2000, has emphasized it’s
importance. As one of the most
commonly cited factors, the “marital lifestyle” must be given special
attention, both in terms of information gathering with the client at the
initial stages of the litigation and in the preparation of the pendente
lite application.
It is often difficult to address the “marital lifestyle” in the
abstract. Although people may
say they have a high, moderate or low lifestyle, that really does not give a
court enough to go on and does not adequately and effectively communicate
how the parties lived. It is
necessary to breakdown the components of the parties’ lifestyle to
effectively convey how they lived. In
doing so, there are various categories of expenditures of everyday life that
should be considered. Each and
every one may not be applicable in every case.
However, the client should be questioned about these categories to
see if they apply, and, if so, a narrative description should be prepared. · Marital residence · Vacation Homes · Other real estate or real property investments · Improvements to real estate · Extent of savings in bank or investment accounts · Extent of automobiles, boats, planes, motorcycles or other vehicles or recreational crafts · Extent of vacations · Extent of furs and jewelry · Nature of stores frequented · Country clubs · Extent of entertainment, including, but not limited to: gambling, sports and hobbies, restaurants, theatre, movies and the like · Extent of gifts · Extent of service providers such as household help, gardeners, maintenance personnel and the like · Nature, extent and value of household furniture and furnishings, including collectibles and artwork · Children’s expenses, including but not limited to private school, camps, tutoring or extracurricular activities · Available cash · Available free time · Personal expenses run through a business · Pets[1]
If the issue of the parties’ lifestyle is a hotly contested issue,
it may be appropriate to retain an accountant to perform a lifestyle
analysis. Various methods for
communicating the parties’ lifestyle to adverse counsel and the court are
explored in an article written by myself and Carl D. Gensib, C.P.A., Esq., a
forensic accountant, which is attached hereto as Exhibit “C”.
Only after the marital lifestyle is appropriately considered can a
Case Information Statement be effectively prepared.
Although this presentation will not delve into the preparation of the
Case Information Statement and the Child Support Worksheet, since that
justifies its own seminar, it is important to note that the lifestyle
analysis, if done properly, will effectively support the figures in an
accurate Case Information Statement. CUSTODY
Although
this presentation will not address the complexities of a custody case, when
standard time sharing and related issues are in dispute between the parties
and raised in a pendente lite motion,
an effective tool for assisting the court is a detailed Parenting Plan.
Although we all know that Parenting Plans are to be filed pursuant to
R. 5:8-5, unfortunately this requirement is not often met.
Nonetheless, when timesharing and related issues are raised in pendente lite applications, submission of a proposed Parenting Plan
as part of the form of order may allow the court to adopt the proponent’s
plan if it is reasonably and fairly presented.
A sample of Parenting Plans is attached hereto and marked as Exhibit
“D”. AFFIDAVIT OF ATTORNEY SERVICES
Very
often, although very dear to the heart of all attorneys, the issue of
counsel fees is given short shrift in pendente
lite applications. More
importantly, counsel very often fail to file the requisite Affidavit of
Services. If they do file such
a document, it usually gives only the amount of time expended on the motion
and the hourly rate of the attorney, plus disbursements. Many counsel fail to include in their Affidavits of Attorneys
Services the factors required by R. 4:42-9 and R.P.C. 1.5(a).
Every Affidavit of Services should include the following information: 1. Time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services properly; 2. The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyers; 3. The fee customarily charged in the locality for similar legal services; 4. The amount involved and the results obtained; 5. The time limitations imposed by the client or by the circumstances; 6. The nature and length of the professional relationship of the client; 7. The experience, reputation and ability of the lawyer or lawyers performing the services; 8. The terms of the retainer agreement (with the retainer agreement attached as Exhibit A to the affidavit of services); 9. The amount of the allowance applied for; 10. An itemization of disbursements for which reimbursement is sought; 11. If reimbursement is sought for services by para professionals, the affidavit should include a detailed statement of the time spent and services rendered by the para professionals, a summary of the para professionals’ qualifications, and the attorney’s billing rate for para professional services to clients generally; 12. All applications for the allowance of fees shall state how much has been paid to the attorney (including the amount, if any, received by the attorney from pendente lite allowances) and what provision, if any, has been made for the payment of fees to the attorney in the future.
It is
this writer’s position that the retainer agreement that must be executed
by all matrimonial clients should be attached as Exhibit “A” to the
Attorney’s Affidavit of Services. Further,
the bills that have been rendered to the client (appropriately redacted to
exclude any privileged material) should be attached as Exhibit “B” to
any such Affidavit of Services.
The paralegal will note that many of the items to be referenced
within the affidavits of service can only be completed by the attorney.
Some of the above factors are case specific while others will be
utilized with every Affidavit of Services that the paralegal does for any
one particular attorney.
It is critical to note that no portion of any fee allowance claimed
for attorney’s services shall duplicate in any way the fees claimed by the
attorney for para professional services rendered to the client.
R. 4:42-9(b). For
purposes of this Rule “para professional services” shall mean those
services rendered by individuals who are qualified through education, work
experience or training who perform specifically delegated tasks which are
legal in nature and under the discretion and supervision of attorneys and
which tasks an attorney would otherwise be obliged to perform.”
Id.
Remember, an allowance of fees made on a determination of the matter
shall be included in the judgment or order stating the determination. Therefore, do not forget to attach a proposed form of order
to a pendente lite application and
provide for a separate item leaving a blank so that the court may fill in
the amount of the fees if the court is intending to make such an award. CONCLUSIONIf the above guidelines are followed with the assistance of the attached guidelines, it is very likely that the court will be provided with all relevant information to permit it to make an appropriate and fair award to the benefit of your client. Although gathering and presenting all relevant facts does not guarantee the result that the client may wish, you can be assured that if these procedures are routinely followed, your client will be given the best chances of achieving his or her goals during the pendente lite stages of the divorce litigation. EXHIBIT A MARITAL HISTORY
We also ask that you prepare, separate from the above document, a
marital history. It is
necessary that you provide this marital history in order to prepare your
complaint for divorce or appropriate responsive pleading, and in order for
us to know the relevant issues that exist between you and your spouse.
We ask that you please provide a narrative on the following topics:
1.
Educational backgrounds of you and your spouse.
2.
The medical history and present medical condition of you, your
spouse, and your children (if applicable).
3.
The employment history of you and your spouse including present
employment. Provide the periods
of employment, nature of employment, and the amounts earned.
4.
The circumstances surrounding your meeting (engagement and eventual
marriage). This should include
the date and location of your marriage, and whether it was a religious or
civil ceremony. This could also
include when you began to cohabit together, if applicable.
5.
A chronological narrative of the events leading to the breakdown of
the marriage. This is necessary
in order to determine the basis for a cause of action for divorce.
6.
A summary of any inappropriate behavior and/or actions committed by
your spouse. (This can include
such things as emotional, verbal, or physical abuse, personal or financial
misdeeds: frauds, crimes; etc.)
7.
Indicate whether or not either of you were previously married, to
whom, the length of the said marriage, and how it was terminated.
Please indicate whether either of you have children of previous
marriages.
8.
Detail all background data and any major concerns relative to the
children of the present marriage, including their birth, dates of schooling,
and any physical or mental health issues.
9.
Provide all relevant work and home telephone numbers of you and your
spouse. 10. Provide the names of all accountants or other professionals which have been retained by you or your spouse; or with which your spouse may have a working relationship.
11.
Provide a chronological summary of your residences within the last
two years. This should include
those of your spouse. This is necessary for completing the complaint for divorce
and the determination of venue of this matter. EXHIBIT
“B” CAUSE OF ACTION Marriage
and Children 1. DATE OF MARRIAGE: _____________ 2. LENGTH OF MARRIAGE: ____________ 3. CHILDREN: ____________________ ___________________ _____________________ 4. DATE OF SEPARATION: __________ 5. DATE OF COMPLAINT: __________ 6.
PRESENT AGE OF PARTIES:
Husband (__) 7. INCOME OF PARTIES: Husband: $___________ per year Wife: $____________per year Allegations of Extreme Cruelty 8. CUSTODY AND TIMESHARING a. Status Quo 9. b. Mental Health and Fitness of Each Parent 10. c. Mental Health of Child 11. d. Stability of Home Environment 12. e. Physical Environment of Each Party 13. f. Age and Physical Health of the Parties 14. g. Criminal History of Either Parent or Cohabitant 15. h. Ability to Provide Social Development 16. i. Ability to Provide Religious Development 17. j. Ability to Provide Intellectual Development 18. k. The Parents’ Ability to Agree, Communicate and Cooperate on Matters Relating to the Children 19. l. The Parents’ Willingness to Accept Custody and Any History of Unwillingness to Allow Visitation, Unless Such Unwillingness Was Based on Substantiated Abuse 20. m. The Interaction and Relationship of the Children With Their Parents and Siblings 21. n. Any History of Domestic Violence 22. o. The Safety of the Children and the Safety of Either Parent From Physical Abuse From the Other 23. p. The Preference of the Children When They Are of Sufficient Age and Capacity to Form an Intelligent Decision 24. q. The Needs of the Children 25. r. The Quality and Continuity if the Children’s Education 26. s. The Geographical Proximity of the Parents’ Homes 27. t. Smoking By Either Party of Member of That Parents’ Household 28. u. Other Members of the Household and Their Influence on the Child 29. EQUITABLE DISTRIBUTION a.
The Duration of the Marriage 30. b. The Age and Physical and Emotional Health of the Parties 31. c.
The Income or Property Brought to the Marriage by Each Party 32. d. The Standard of Living Established During the Marriage 33. e. Any Written Agreement Made by the Parties Before or During the Marriage Concerning an Arrangement of Property Distribution 34. f. The Economic Circumstances of Each Party at the Time the Division of Property Becomes Effective 35. g. The Income and Earning Capacity of Each Party, Including Educational Background, Training, Employment Skills, Work Experience, Length of Absence From the Job Market, Custodial Responsibilities for Children, and the Time and Expense Necessary to Acquire Sufficient Education or Training to Enable the Party to Become Self-Supporting at a Standard of Living Reasonably Comparable to That Enjoyed During the Marriage 36. h. The Contribution by each Party to the Education, Training or Earning Power of the Other 37. i. The Contribution of Each Party to the Acquisition, Dissipation, Preservation, Depreciation or Appreciation in the Amount or Value of the Marital Property, as Well as the Contribution of a Party as a Homemaker 38. j. The Tax Consequences of the Proposed Distribution to Each Party 39. k. The Present Value of the Property 40. l. The Need of a Parent Who Has Physical Custody of a Child to Own or Occupy the Marital Residence and to Use or Own the Household Effects 41. m. The Debts and Liabilities of the Parties 42. n. The Need for Creation, Now or in the Future, of a Trust Fund to Secure Reasonably Foreseeable Medical or Educational Costs for a Spouse or Children 43. o. The Extent to Which a Party Deferred Achieving Their Career Goals 44. p. Any Other Factors Which the Court May Deem Relevant 45. ALIMONY a.
The Actual Need and Ability of the Parties to Pay 46. b.
The Duration of the Marriage 47. c.
The Age, Physical and Emotional Health of the Parties 48. d.
The Standard of Living Established in the Marriage and the
Likelihood That Each Party Can Maintain a Reasonably Comparable Standard of
Living 49. e. The Earning Capacities, Educational Levels, Vocational Skills, and Employability of the Parties 50. f.
The Length of Absence From the Job Market and Custodial
Responsibilities For Children of the Party Seeking Maintenance 51. g. The Time and Expense Necessary to Acquire Sufficient Education or Training to Enable the Party Seeking Maintenance to Find Appropriate Employment, the Availability of the Training and Employment, and the Opportunity for Future Acquisitions of Capital Assets and Income 52. h. The History of the Financial or Non-Financial Contributions to the Marriage by Each Party Including Contributions to the Care and Education of the Children and Interruption of Personal Careers or Educational Opportunities 53. i.
The Equitable Distribution of Property Ordered and Any Payouts on
Equitable Distribution, Directly or Indirectly, Out of Current Income, to
the Extent This Consideration is Reasonable, Just and Fair 54. j. Any Other Factors Which the Court May Deem Relevant 55. CHILD
SUPPORT Child
Support Guidelines Assumptions 56.
EXHIBIT
“C” THE “LIFESTYLE
ANALYSIS” By
With the coming of the most recent pronouncement from our Supreme
Court embodied in the case of Crews
v. Crews, 164 N.J. 11 (2000), decided May 31, 2000, the requirement
that litigants, matrimonial attorneys and family court judges know,
appreciate and appropriately consider the “marital lifestyle” has risen
to an all time high. The CREWS decision essentially requires a “baseline” for the support
structure to be set. There are
two critical aspects of that baseline: (1) Income upon which support was
based and (2) marital lifestyle. The
obligation for a trial court to make a finding of the “marital lifestyle,”
even in a settled case, creates a universal need for a uniform approach to
analyzing the “marital lifestyle” and conveying that lifestyle to one’s
adversary and, ultimately, to the court.
This article will suggest three methods of presenting the necessary
baseline, including the “marital lifestyle”, in the course of a
matrimonial action from settlement to uncontested hearing or trial. A Brief History
of “Lifestyle”
As we know, the CREWS
decision has made it clear that, in a post judgment application to modify
alimony, the court must determine whether the supported spouse can maintain
a lifestyle that is reasonably comparable to the standard of living enjoyed
during the marriage. Id at 17
The Supreme Court stated that “identifying the marital standard of
living at the time of the original divorce decree, regardless of whether a
maintenance order is entered by the court or a consensual agreement is
reached, becomes critical, then, to any subsequent assessment of changed
circumstances when an adjustment to alimony is sought.” Id at 25.
It is clear from Lepis[2]
and its progeny that motion courts have found that the marital standard of
living is an essential component in the changed circumstances analysis when
reviewing an application for modification of alimony. Id
The Supreme Court then clarified that the procedures to be
implemented at the time a settled case is put through as follows: “accordingly,
lest there be an insufficient record for the settlement, the court should
require the parties to place on the record the basis for the alimony award
including, in pertinent part, establishment of the marital standing of
living, before the court accepts the divorce agreement.”
Id at 26. Further complicating the job of matrimonial attorneys and judges, the court further noted that reliance upon the Case Information Statement (CIS) will not be sufficient. The court reasoned that since such documents generally “reflect a more current financial picture of the parties,” they do not reflect the standard of living enjoyed during the marriage. Therefore, that information is not a substitute for the party’s stipulation [or testimony] on the marital standard of living. Id The need to determine the marital standard of living was also discussed in last year’s Appellate Division case of Carter v Carter 318 N.J. Supra 34 (App.Div. 1999). In Carter, the Appellate Court addressed the issue of whether a dependant spouse could seek alimony after the rehabilitative alimony had expired. Additionally, the court addressed the issue of what special procedure would be required to be employed by a trial court entering a judgement of divorce, whether settled or tried, when rehabilitative alimony was involved. The Appellate Court found that by statute, trial courts must make specific findings on rehabilitative alimony, even in cases where a settlement is obtained. When granting rehabilitative alimony or when endorsing a rehabilitative alimony provision where rehabilitative alimony is a negotiated term of a Property Settlement Agreement, the Appellate Court mandated that trial judges examine each party as to the parties’ comprehension of the rehabilitative alimony provision including but not limited to (A) the reasons for rehabilitative alimony; (B) the standard of living which existed during the marriage; (C) the dependent spouse’s rehabilitation goals, and (D) whether the parties contemplated the continuation of alimony beyond the end of the term of rehabilitative alimony.[3] This is especially needed where one of both of the parties may incorrectly believe that the duty to pay alimony will conclude at the end of the rehabilitative alimony. The Carter court reasoned that the lack of testimony on the topic of rehabilitative alimony at the divorce proceeding places a motion judge presiding at an ensuing change of circumstances hearing at a disadvantage in reconciling the needs of each party as of the date of the change of circumstances motion with the needs of each party as of the date of the divorce. As in CREWS, a “baseline” was viewed as critical. Just as our Supreme Court has recently done, the Carter Appellate Court found that when determining whether or not to modify alimony, the “overriding equitable consideration is a determination of whether the former marital standard of living is being maintained.” Id et 46. Methods to
Present Lifestyle
We propose three basic ways to present the marital lifestyle to your
adversary and, ultimately, to a court at the time of trial or an uncontested
hearing. Ideally, the most
efficient and cost effective method, is to enter into an “Income &
Lifestyle Stipulation”. When
that fails, there are generally two alternative methods to present
lifestyle. The first is a
narrative with little documentary back-up.
The last and preferable method, is a comprehensive “Lifestyle
Analysis” by a qualified forensic accountant. I.
Agreement as to Baseline via the “Crews Stipulation” There may be situations where the parties can agree to the essential baseline elements required by CREWS. In such situations, it is proposed that a uniform form of stipulation be used to work toward and present an agreement on the baseline. Such a form of stipulation should address the categories of expenditures of everyday life. These categories can include, but may not necessarily be limited to the following: - Marital residence - Vacation Homes - Other real estate or real property investments - Improvements to real estate - Extent of savings in bank or investment accounts - Extent of automobiles, boats, planes, motorcycles or other vehicles or recreational crafts - Extent of vacations - Extent of furs and jewelry - Nature of stores frequented - Country clubs - Extent of entertainment including but not limited to: gambling, sports and hobbies, restaurants, theatre, movies and the like - Extent of gifts - Extent of service providers such as household help, gardeners, maintenance personnel and the like - Nature, extent and value of household furniture and furnishings, including collectibles and artwork - Children’s expenses, including but not limited to private school, camps, tutoring or extracurricular activities - Available cash - Available free time - Personal expenses run through a business - Pets[4]
Each of the foregoing may or may not be applicable in every case. Further, there may be additional items that may be required.
Nevertheless, if a matrimonial litigant opines as to the majority of
these topics it will have a significant impact in conveying the marital
standard of living or lifestyle.
A proposed form of stipulation to embody the parties’ understanding
of the “baseline” is attached to this article.
Ultimately, this “Crews Stipulation” can be offered as “J-2”
into evidence, after the Property Settlement Agreement.
Obviously, the form attached is very broad and every aspect thereof
may not be applicable in every case. However,
it provides a general outline for constructing and tailoring a stipulation
that will be right for any particular case.
It is critical to note that the fact that parties may not be able to
agree on all values or aspects of the baseline should not eliminate the
ability to enter into a “Crews Stipulation”.
In such situations, a range of values can be inserted into the
stipulation thereby giving a general sense of lifestyle, even though a
precise value is in dispute. In
other words, whether the parties lived in a $1.5 million house versus a $1.9
million house, doesn’t change the fact that they were living a high
lifestyle. This will still be
of great service to a judge years later if a post-judgment to modify support
motion is filed.
If such a uniform stipulation were adopted, it would provide much
assistance with the every day problems facing matrimonial judges and
practitioners in light of the mandates issued by our Supreme Court II.
Narrative Approach
When no stipulation can be reached, the simplest method of presenting
the “marital lifestyle” (whether to the attorney for the other spouse or
a judge at the time of a trial or uncontested hearing) is in a narrative
form. There may be little or no
documentary backup with this approach.
The narrative can track the items referenced in the proposed “Crews
Stipulation” herein submitted. III.
Lifestyle Report by Accountant
Where a stipulation cannot be reached and the narrative approach is
insufficient, the lifestyle must be adequately analyzed and presented. In such instances, an analysis by a forensic accountant who
has reviewed all of the spending records of the parties including but not
limited to checks, cash withdrawals from bank or investment accounts, and
credit card expenditures over a period of years prior to the parties’
separation or filing of complaint for divorce (whichever first occurs) will
be very effective in presenting the “marital lifestyle”.
The first step of a lifestyle audit is to compile all documentation
containing the expenditures of the parties.
Such documentation normally consists of checking account records and
credit card statements for a three year period prior to the parties’
separation or filing of complaint for divorce (whichever first occurs). The accountant will then review every check, credit card
transaction and/or debit card transaction so that they may be categorized.
The categories presented should mirror those appearing in a standard
Case Information Statement “CIS”.[5]
In other words, the format of the analysis of the three years prior
to separation (as well as the “reconstructed” budget) should be broken
down among Schedule A, Shelter Expenses; Schedule B, Transportation
Expenses; and Schedule C, Personal Expenses.
The product of this procedure is a schedule in the lifestyle audit
report presenting a three year comparison of expenditures utilizing the CIS
format. The three year analysis
will include all spending by both parties for themselves and their children.
Once total expenditure levels for a three year base period have been
identified, a “reconstructed” marital lifestyle budget for the dependent
spouse and children (as applicable) can be prepared.
Beginning with Schedule A; Shelter and its first category mortgage
payments and proceeding down each category of Schedules A, B and C a
determination must be made as to the appropriate level of expense to be
inserted into various categories of the marital lifestyle budget.
In preparing the budget many issues must be addressed, some of which
will require input from the matrimonial attorney. These issues include, but are not limited to the following:
Current Actual Expenditures - Certain budgetary expense
categories are easily determined based upon current actual expenditures.
A mortgage payment is a typical example of such a category.
In determining the appropriate expense level for a category such as
mortgage payments, clearly the actual current expenditure level or the
expenditure level just prior to the parties separation is appropriate as
opposed to an average or modified average for the three year period
presented.
Averaging Expenditures - When dealing with discretionary
expenditures, it is appropriate to use an average of the three years in
developing an appropriate expense level.
Although the case law specifically states that the lifestyle is
measured as of the date of separation, it is more credible at times, to use
a three year average, unless circumstances justify using a longer or shorter
period. Examples of such
expenditure which should typically be averaged are:
Repairs and Maintenance; Food, Restaurants, clothing, vacations,
gifts, savings and entertainment.
Modifying the Averages.
Certain expenditure categories, although consistent throughout the three
year period compiled, will require modification due to factors such as the
following: a.
Expenditures attributable to the supporting spouse must be
eliminated. Such expenditures
will impact a variety of categories such as food, clothing, vacations,
entertainment etc.. At times
expenditure categories may have to be eliminated entirely if attributable
directly to the supporting spouse. b.
Expenditures paid directly by the supporting spouse.
Expenditures such as life insurance payments which appear in the
three year comparison of expenditures but will be paid directly by a
supporting spouse need to be eliminated in developing a lifestyle budget for
the dependent spouse. c.
Expenditures that will be effected by child sharing arrangements need
to be adjusted if appropriate. If
the supporting spouse has significant periods of custody, expenditures for
such categories as food and household supplies must be modified.
Expenses Paid From a Business.
In certain situations, expenditures of the dependent spouse are paid
directly from the supporting spouse’s businesses and therefore will not
appear on the three year comparison of expenditures.
A common example is automobile expenses.
In such cases, actual expenditures coming from the business must be
quantified and added to the appropriate expense category.
Further, if a current vehicle is expected to reach it’s useful end
soon, an estimated replacement expense should be inserted.
Nonrecurring Expenditures. Certain
expense categories may include nonrecurring expenditures such as the
installation of landscaping or renovations to a home.
The lifestyle budget may be adjusted for such nonrecurring expenses.
Deferred Expenditures. At
times, the three years of comparative expenditures will not include a
deferred expense such as a roof replacement or excess miles on an auto
lease. Such issues should be discussed with the client and the
lifestyle budget adjusted accordingly.
Cash Expenditures. Cash
expenditures may at times be difficult to categorize.
Such expenses should be reviewed with the clients and repetitive cash
expenditures for such items as domestic help be appropriately classified.
Elimination of Periods Presented.
Although it is suggested that the three year period prior to the date
of separation or filing of the complaint (whichever first occurs) be
utilized in developing a lifestyle analysis, at times, it may be necessary
to eliminate a period because it is not indicative of the marital lifestyle.
This may occur because of excess expenditures or the minimization of
expenditures in contemplation of divorce.
If the supporting spouse leaves the marital residence mid year this
will effect total expenditure levels and therefore the usefulness of the
information on lifestyle provided for that year.
Further, a supporting spouse may not be providing sufficient funds to
a the dependent spouse or household, thereby artificially reducing
expenditures. It should be noted that the departure of the supporting spouse from the marital residence for an extended period, prior to separation or the filing of the date of Complaint, can at times result in the best possible financial information for purposes of preparing a marital lifestyle budget report. (Caveat: This assumes that the supporting spouse is providing sufficient funds consistent with historic spending.) With the supporting spouse out of the marital residence reductions in the various expense categories become clear. Therefore, rather than having to make a subjective determination of the percentage of such items as food and household supplies attributable to the supporting spouse in determining the various expenditure levels in the marital lifestyle audit report, we have actual figures. Under such circumstances, it may be best to utilize only the most recent one year period |