Divorce can be a long and expensive process between attorney’s fees, court costs and time spent dealing with litigation. One of the most frequent sources of divorce expense is one spouse engaging in discovery to figure out the marital assets in the control of the other spouse. In situations where one spouse was primarily responsible for the finances, the other spouse is at a disadvantage and has to expend more time and effort to uncover all of the property subject to division in this divorce action. In an effort to streamline and simplify the exchange of information in divorce cases, the Michigan Supreme Court adopted major revisions to the Michigan Court Rules effective January 1, 2020 to ensure a full and comprehensive financial disclosure from both spouses in the very beginning of the court proceeding.
PARTIES MUST EXCHANGE VERIFIED FINANCIAL INFORMATION FORMS
“Unless waived in writing by the parties, or unless a settlement agreement or consent judgment of divorce or other final order disposing of the case has been signed by both parties at the time of filing, and except as set forth below, each party must serve [Form CC 320 (Domestic Relations Verified Financial Information Form), hereafter ‘Verified Financial Information Form’] within 28 days following the date of service of defendant’s initial responsive pleading.” MCR 3.206(C)(2). This form requires the parties to disclose the following:
- Personal information such as name, address, date of birth, social security number and driver’s license number.
- Employment information such as name and address of employer, occupation, professional licenses, gross income, hourly rate or salary, overtime, employment benefits such as health insurance, retirement or car allowances, owner’s draw if self-employed, and past employer information if unemployed.
- Sources of other income including, but not limited to, annuities, dividends, interest, bonuses, pensions, commissions, VA benefits, Social Security benefits, disability pay, worker’s compensation, SSI, trust fund distribution and armed services pay.
- Asset information regarding real property, financial accounts, pensions, life insurance, motor vehicles, personal property, safe deposit boxes, ownership interests in any kind of business, electronic assets such as NFT or bitcoin, and court cases or judgments amounting to a possible award for you.
- Debts such as credit cards, personal loans, student financial aid loans, court ordered financial obligations such as alimony and spousal support, and other unsecured debt.
- Miscellaneous information such as bankruptcy, assets or debts claimed as separate property not subject to division, and other information that can affect the outcome of the divorce proceeding.
“If a party is self-represented and his or her address is not disclosed due to domestic violence, the parties’ Verified Financial Information forms will be exchanged at the first scheduled matter involving the parties or in another manner as specified by the court or stipulated to by the parties.” MCR 3.206(C)(2). “A party who is a victim of domestic violence, sexual assault or stalking by another party to the case, may omit any information which might lead to the location of where the victim lives or works, or where a minor child may be found.” Id. If a party excludes his or her address for good cause, that party can agree to electronic service of the Verified Financial Information form (e.g. email) or provide an alternative address where mail can be received. MCR 3.206(C)(3)(a-b).
The Verified Financial Form is confidential and NOT filed with the court and may not be released to other entities besides the court, the parties, or their attorneys without court order. MCR 3.206(C)(3). However, a proof of service must be filed with the court when Verified Financial Information forms are served. MCR 3.206(C)(2).
If any of the information required to be in the Verified Financial Information forms is omitted, the party completing must explain the reasons for the omission in those forms on a statement filed with the court. MCR 3.206(C)(4). “A party who has served a Verified Financial Information form must supplement or correct its disclosure as ordered by the court or otherwise in a timely manner if the party learns that in some material respect the Verified Financial Information form is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the [divorce] action or in writing.” MCR 3.206(C)(5).
WHAT HAPPENS IF PARTIES DO NOT COMPLY WITH FINANCIAL DISCLOSURES?
A party who fails to provide the Verified Financial Information form as required can be subject to the other party filing a motion to compel disclosures and asking a court to order that they be filed. MCR 3.206(C)(2). A motion to compel disclosure can also request that the court order appropriate sanctions. MCR 2.313(A)(2)(a).
“If the motion is granted-or if the disclosure… is provided after the motion was filed-, the court may, after opportunity for hearing, require the party… whose conduct necessitated the motion or the party or attorney advising such conduct, or both, to pay to the moving party the reasonable expenses incurred as a result of the conduct and in making the motion, including attorney fees, unless the court finds that the moving party filed the motion before attempting in good faith to obtain the disclosure… without court action, the opposition to the motion was substantially justified, or other circumstances make an award unjust.” MCR 2.313(5)(a).
In serious cases of disclosure violations, the court can grant a default judgment in favor of the non-offending party or even dismiss the divorce action altogether.
DIVORCE PROCEEDINGS ARE COMPLICATED AND YOU SHOULD HAVE A SKILLED LAWYER IN YOUR CORNER TO PROTECT YOUR RIGHTS
The rules regarding verified financial disclosures can be confusing and put a pro per litigant at risk for sanctions if he or she does not know better. Anyone involved in a divorce proceeding in Michigan should, at the very minimum, speak to a family law lawyer to be advised of the legal responsibilities they have under the law. It is more advisable to make the investment into having legal counsel on your side that can help you get the best possible outcome in the divorce. You only have one opportunity to do it correctly, and you will not be able to get a “do-over” of the property settlement or spousal support award if you did not get what you want before.
If you or a loved one have further questions or need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.