The Progressive Lawyer

In March of this year, in Part One of this article, we discussed the importance of the initial pendente lite application in introducing the parties to the judge and setting the tone for the balance of the case. The mandate that we provide judges with sound, hard evidence at the pendente lite phase — in order to enable the courts to deal fairly with both sides pending the submission of final proofs — was heavily stressed.

We now continue with more specifics concerning the preparation of the application. Specifically, we discuss the preparation of what can arguably be the single most important document of your case; the Case Information or Financial Disclosure Statement.

Case Information or Financial Disclosure Statement

The Case Information Statement (CIS) or Financial Disclosure Statement (FDS), with all required attachments, is typically the most important attachment to a pendente lite motion. As a word of caution, the CIS/FDS can be used against the client's interests if care is not taken in completing it. Do not give a blank CIS/FDS to the client and then publish the client's raw work product for all the world to see. This could lead to disaster. The fact of the matter is that most raw CIS/FDS submissions are filled with potentially damaging errors.

Instead, there are steps that should be followed before the client fills in the CIS/FDS — and thereafter, prior to arriving at a smooth draft. One useful practice involves having clients bring their most recent state and federal tax returns, W-2s, 1099s, as well as a series of sequential pay stubs (or pay stub equivalents) from all employment, to an office consultation early in the process. These documents should then be copied. The lawyer or paralegal should then go over the documents with the client, being careful to circle any entries — such as certain payroll deductions and itemized deductions on the tax returns – that warrant clarification. Many clients are uncertain about what some of their payroll deductions even are and, more often than not, the legends explaining them are not attached to the pay stubs or are undecipherable.

Draw straight lines from each circled entry to the margin of each page and ask the client to explain each item. Then, print the client's explanation for each in the margin at the end of the corresponding line. Clients may well have to consult their tax preparers and payroll departments to accomplish this. If various legends or codes are used, and appear in various places on the client's pay stub, be sure that the explanations corresponding to these shorthand devices are part of your file.

Another helpful practice involves providing clients with a copy of a Notice to Produce Documents, to assist them in assembling documents they have, and as a guide to discovering the documents they do not have, but may need. If some of the requested documents are in the other party's possession, you not only have a guide as to what to include in a Notice to Produce to be serve upon the other party, but you also have the beginnings of a Rider to attach to your client's CIS/FDS, setting forth all the documents to which you did not have access while preparing your client's CIS/FDS.

When the filled-in CIS/FDS is received back from the client, it must be carefully reviewed to ensure that the CIS/FDS reflects the client's real circumstances, as sought to be presented and as will be demonstrated through proofs. The client must be advised that, although the CIS/FDS may typically be amended during the course of the case, every time the CIS/FDS is completed, it must be accurate to the extent of the client's reasonable perceptions, as of the date of completion. After all, Case Information Statements or other forms of Financial Disclosure State-ments are ordinarily completed and signed under oath and under penalty of perjury. Clients must be made well aware that the submission of knowingly erroneous sworn documents can be used for impeachment purposes at trial and to impugn the client's credibility down the road.

Your review of the client's raw CIS/FDS (and the other party's filed one) should include the following:

• Comparison of the income information on the CIS/FDS with the income information on the tax returns;
• Comparison of the tax payments and deductions as set forth in the CIS/FDS with that which appears on the filed tax returns;
• Comparison of the last three pay stubs and projections of annual earnings for the current year (based upon year-to-date figures) with year-end earnings, as evidenced by the prior year's filed tax returns, W-2s and 1099s;
• Comparison of the income-earning assets appearing on the CIS/FDS assets balance sheet with the actual income set forth on the previously filed tax returns;
• Comparison of the unreimbursed business deductions appearing on the filed tax returns with the transportation costs appearing on the CIS/FDS;
• Comparison of any itemized monthly tax reserve appearing on the CIS/FDS with the annual federal, state and local taxes as evidenced by the filed returns;
• Analysis of any bonus computation, with possible carry-over to the following year for tax purposes;
• In appropriate cases where you al-ready have the other party's CIS/FDS, review of any direct payments claimed to have been made by the payor spouse, which are or will be included or omitted in the payee spouse's CIS/FDS, such as automobile, medical and educational expenses;
• Recognition of expenditures appear-ing on the CIS/FDS, where there might not have been similar expenditures in the past. Con-versely, recognition of any previously existing recurring expenses that may have been omitted on the current CIS/FDS (these are, of course, interview questions for your client, concerning his or her CIS/FDS, and about the other party's filed CIS/FDS);
• Comparison of any monthly itemized expense for debt service appearing on the CIS/FDS, with the existing credit card debt appearing on the CIS/FDS liabilities balance sheet, if one is provided for, ensuring that “double-dipping” does not occur;
• Comparison of the monthly item-ized expense for car payments appearing on the CIS/FDS, with any existing car loan appearing on the CIS/FDS liabilities balance sheet, if one is provided for, ensuring that “double-dipping” does not occur;
• Comparison of the itemized monthly costs for life insurance appearing on the CIS/FDS, with the total life insurance cash surrender values, which were accumulated during coverture; and
• Comparison of the monthly savings component appearing on the CIS/FDS, with the assets actually accumulated during coverture.

First Impressions

Remember, the CIS/FDS presents the first impression to the judge of your client's initial economic needs. It is also the initial repository of information about a party's ability to pay. Your client's (or the other party's) pay stubs may not accurately set forth earnings for the current year, which will necessarily reoccur the following year. If separate pay stubs are not provided for bonuses, there is clearly the potential for inaccuracy going forward, since the bonus may not be the same next year. The pay stub may also reflect both an old salary level and a salary increase during the same year. It is important to use riders to explain exactly what the income means, as well as the actual periodic regularly recurring income level.

In fact, as a general rule, if anything in your client's CIS/FDS is potentially unclear, always employ the use of schedules and riders to clarify and justify the numbers provided. Define your client's terms so that the CIS/FDS cannot be used to impeach your client's credibility in the future. Frequently, the provision of information is estimated, particularly toward the beginning of your case. Make sure that you indicate on the CIS/FDS the instances in which your figures are estimated, by keying-in the letters “est” next to your entries. Another approach, where estimations may be too attenuated, is to include the letters “TBD” (to be determined) next to any blank entries that might otherwise be filled in.

It is important to consider whether you want to distinguish between the needs of a spouse and the needs of children in the CIS/FDS. This may be difficult to accomplish early on in the pendente lite support phase of your case. In cases where the family continues to live at the same residence, making a distinction between spousal and child-related expenses may be unnecessary, since your client is still living in an intact family setting. In that case, what was done during the pre-complaint household is what should arguably continue. Case Information Statements/Financial Disclosure Statements filed when the family is still living together provide a useful baseline for marital lifestyle analyses. One might even consider drafting an adjunct CIS/FDS, reflecting what the intact family budget was, even after the parties have separated. Some juridictions (New Jersey, for example) have recently altered their reporting formats to provide for historical marital life-style figures, as well as for contrasting pendente lite budgetary figures.

The CIS/FDS requires us to accurately identify the number of people whose needs are to be addressed by the support request. After your client reviews the credit card statements, check register entries, etc. in order to get a handle on family expenses, the approximations arrived at are likely reflective of expenses relating to the intact family. If your client is attempting to approximate a budget for living separately — with or without children — adjustments need to be made. As the case gets older, it is increasingly important that these adjustments be made. One useful feature in allocating expenses — particularly when you are representing the payor spouse – is that you can clearly illustrate to the judge that your client has expenses too.

The allocation of expenses between parent and children also facilitates post-judgment review on applications for modification to both spousal and child support (if ease of future review is what you are going for).

Separating the Sums

As early as the pendente lite stage, the court must separate the sums needed for spousal support, versus those sums representing the needs of the children. Consider using additional budget sheets or columns to itemize your client's needs. It is our obligation to present information to the court — by way of evidence and testimony — that is supportive of the claim that certain expenses reflect the needs of the spouse versus those of the children. The court is required in many jurisdictions to make the determination of alimony before entering an award for child support. If we fail to present to the court a basis upon which to make the allocation between alimony and child support in such jurisdictions, then we have failed to present the alimony issue properly.

There is no easy way to allocate a child's expenses. It is much easier to subtract-out the expenses of the other spouse. There is no heuristic that can be mechanistically applied to calculate what portion of a family budget represents the child's needs and what portion represents those of the dependent spouse. We should generally shy away from the use of arbitrary percentages to calculate allocations, without some further persuasive proofs or testimony.

Housing

Avoid using an arbitrary percentage of the current housing costs. If three people are living under the same roof, do not assume that your client's expense is simply one-third of the total. Socio-economic studies have proven that, as the number of children increases, the marginal cost associated with each child does not rise in direct proportion. The needs of the dependent spouse are generally constant, regardless of the number of children. Do not forget about the many “pleasures” of home ownership, including the costs of broken plumbing, snow removal, leaky roofs and yard work. There are often cases where one spouse routinely did many of these things. (we have even heard a few husbands actually offer to continue doing lawn care and household maintenance, in lieu of paying alimony). Will the fact of this lost handy spouse result in additional expenses for the remaining spouse? Typically, it would.

In most households, continuing expenses associated with equipment and furnishings are quite predictable. Clients often overlook many of them, however. While the new clothes washer and the wall-length entertainment unit with flat-screen TV purchased last year may quickly come to mind, the smaller items such as bedding, window treatment and knickknacks often miss the cut. They do, however, add up.

Transportation

Include your client's car payment, leasing costs, registration and license fees (one-month pro rata portion, as with all non-monthly expenses), insurance, maintenance, fuel, and commuting expenses, if applicable. Identify the type of vehicle your client has typically driven over the past 3 to 5 years. Consider making adjustments if the car currently in use is typical of the marital lifestyle, or if it's an out-of-repair “clunker,” necessitated by current conditions. Consider also (for future reference) if it would be replaced during the alimony term. Remember that pendente lite applications do not happen in a vacuum. The ultimate desired outcome of your case must also be reflected in and consistent with your pendente lite application, including the supporting CIS/FDS.

Do not arbitrarily use a percentage of the automobile insurance cost (which is more than likely covered under a multiple car family policy) to arrive at your client's allocation. The cost to insure your client's car on an individual policy and in light of the driver's past experience will determine the actual cost of the automobile insurance. Both parties stand to have significantly different premiums when separate policies are used post-dissolution.

Personal Expenses

Always include a savings component, if appropriate. This is often omitted, even on final versions of the CIS/FDS. Determine if savings were a regular part of the marital lifestyle or will be needed to maintain lifestyle later on. If so, it should definitely be added as a budget item. Concerning expenses in general — particularly when you are representing the supported spouse — it is important to subtract-out expenses that are more closely related to your client. This is easier done with some consumption categories than with others. For example, a reasonable food budget for individual adults may vary widely on a case-by-case basis. Food budgets for children may be approximated by considering the number of children, their known eating habits, all in the context of the family's overall eating tendencies.

Your clients must train themselves to see their consumption habits through new eyes. Otherwise, a lot could get overlooked. Don't undervalue the costs of vacations — even short get-aways — entertainment and gifts. Direct your client to go back several years to arrive at an average representative of the marital lifestyle. How does one best present proofs of lifestyle? The more hard and precise the proofs, the easier it will be for the trial court to make a decision in your favor. Obtain the records that were used by the family, reflective of money spent prior to the separation, eg, credit card statements, check registers, and the like.

Client Mind Set

Another consideration in preparing the budget contained in the initial CIS/FDS concerns the fact that your client may not feel favorably disposed to making rational decisions with regard to his or her post-divorce life, especially early on in the pendente lite phase. The pendente lite budget, therefore, may not fairly and accurately address the actual post-judgment needs of your client. It is generally anticipated that the CIS/FDS will be amended, and typically mandated that parties are under a continuing duty to revise the statements as needed. The budget utilized in support of a pendente lite motion should therefore be annotated with language to the effect that the budget is subject to change.

It is usually necessary to prepare multiple budgets in any case involving alimony. The pendente lite budget will almost always differ from the budget presented at trial. Clients should begin focusing on their post-judgment plans early on, especially when the parties are still living under one roof. Will the marital home be sold? If not, who will remain? What will future employment involve? How will childcare be handled?

Conclusion

Competently drafted pendente lite applications — complete with thoughtfully crafted financial disclosure statements — set the stage for successful advocacy while documenting the quality of your professionalism.

In March of this year, in Part One of this article, we discussed the importance of the initial pendente lite application in introducing the parties to the judge and setting the tone for the balance of the case. The mandate that we provide judges with sound, hard evidence at the pendente lite phase — in order to enable the courts to deal fairly with both sides pending the submission of final proofs — was heavily stressed.

We now continue with more specifics concerning the preparation of the application. Specifically, we discuss the preparation of what can arguably be the single most important document of your case; the Case Information or Financial Disclosure Statement.

Case Information or Financial Disclosure Statement

The Case Information Statement (CIS) or Financial Disclosure Statement (FDS), with all required attachments, is typically the most important attachment to a pendente lite motion. As a word of caution, the CIS/FDS can be used against the client's interests if care is not taken in completing it. Do not give a blank CIS/FDS to the client and then publish the client's raw work product for all the world to see. This could lead to disaster. The fact of the matter is that most raw CIS/FDS submissions are filled with potentially damaging errors.

Instead, there are steps that should be followed before the client fills in the CIS/FDS — and thereafter, prior to arriving at a smooth draft. One useful practice involves having clients bring their most recent state and federal tax returns, W-2s, 1099s, as well as a series of sequential pay stubs (or pay stub equivalents) from all employment, to an office consultation early in the process. These documents should then be copied. The lawyer or paralegal should then go over the documents with the client, being careful to circle any entries — such as certain payroll deductions and itemized deductions on the tax returns – that warrant clarification. Many clients are uncertain about what some of their payroll deductions even are and, more often than not, the legends explaining them are not attached to the pay stubs or are undecipherable.

Draw straight lines from each circled entry to the margin of each page and ask the client to explain each item. Then, print the client's explanation for each in the margin at the end of the corresponding line. Clients may well have to consult their tax preparers and payroll departments to accomplish this. If various legends or codes are used, and appear in various places on the client's pay stub, be sure that the explanations corresponding to these shorthand devices are part of your file.

Another helpful practice involves providing clients with a copy of a Notice to Produce Documents, to assist them in assembling documents they have, and as a guide to discovering the documents they do not have, but may need. If some of the requested documents are in the other party's possession, you not only have a guide as to what to include in a Notice to Produce to be serve upon the other party, but you also have the beginnings of a Rider to attach to your client's CIS/FDS, setting forth all the documents to which you did not have access while preparing your client's CIS/FDS.

When the filled-in CIS/FDS is received back from the client, it must be carefully reviewed to ensure that the CIS/FDS reflects the client's real circumstances, as sought to be presented and as will be demonstrated through proofs. The client must be advised that, although the CIS/FDS may typically be amended during the course of the case, every time the CIS/FDS is completed, it must be accurate to the extent of the client's reasonable perceptions, as of the date of completion. After all, Case Information Statements or other forms of Financial Disclosure State-ments are ordinarily completed and signed under oath and under penalty of perjury. Clients must be made well aware that the submission of knowingly erroneous sworn documents can be used for impeachment purposes at trial and to impugn the client's credibility down the road.

Your review of the client's raw CIS/FDS (and the other party's filed one) should include the following:

• Comparison of the income information on the CIS/FDS with the income information on the tax returns;
• Comparison of the tax payments and deductions as set forth in the CIS/FDS with that which appears on the filed tax returns;
• Comparison of the last three pay stubs and projections of annual earnings for the current year (based upon year-to-date figures) with year-end earnings, as evidenced by the prior year's filed tax returns, W-2s and 1099s;
• Comparison of the income-earning assets appearing on the CIS/FDS assets balance sheet with the actual income set forth on the previously filed tax returns;
• Comparison of the unreimbursed business deductions appearing on the filed tax returns with the transportation costs appearing on the CIS/FDS;
• Comparison of any itemized monthly tax reserve appearing on the CIS/FDS with the annual federal, state and local taxes as evidenced by the filed returns;
• Analysis of any bonus computation, with possible carry-over to the following year for tax purposes;
• In appropriate cases where you al-ready have the other party's CIS/FDS, review of any direct payments claimed to have been made by the payor spouse, which are or will be included or omitted in the payee spouse's CIS/FDS, such as automobile, medical and educational expenses;
• Recognition of expenditures appear-ing on the CIS/FDS, where there might not have been similar expenditures in the past. Con-versely, recognition of any previously existing recurring expenses that may have been omitted on the current CIS/FDS (these are, of course, interview questions for your client, concerning his or her CIS/FDS, and about the other party's filed CIS/FDS);
• Comparison of any monthly itemized expense for debt service appearing on the CIS/FDS, with the existing credit card debt appearing on the CIS/FDS liabilities balance sheet, if one is provided for, ensuring that “double-dipping” does not occur;
• Comparison of the monthly item-ized expense for car payments appearing on the CIS/FDS, with any existing car loan appearing on the CIS/FDS liabilities balance sheet, if one is provided for, ensuring that “double-dipping” does not occur;
• Comparison of the itemized monthly costs for life insurance appearing on the CIS/FDS, with the total life insurance cash surrender values, which were accumulated during coverture; and
• Comparison of the monthly savings component appearing on the CIS/FDS, with the assets actually accumulated during coverture.

First Impressions

Remember, the CIS/FDS presents the first impression to the judge of your client's initial economic needs. It is also the initial repository of information about a party's ability to pay. Your client's (or the other party's) pay stubs may not accurately set forth earnings for the current year, which will necessarily reoccur the following year. If separate pay stubs are not provided for bonuses, there is clearly the potential for inaccuracy going forward, since the bonus may not be the same next year. The pay stub may also reflect both an old salary level and a salary increase during the same year. It is important to use riders to explain exactly what the income means, as well as the actual periodic regularly recurring income level.

In fact, as a general rule, if anything in your client's CIS/FDS is potentially unclear, always employ the use of schedules and riders to clarify and justify the numbers provided. Define your client's terms so that the CIS/FDS cannot be used to impeach your client's credibility in the future. Frequently, the provision of information is estimated, particularly toward the beginning of your case. Make sure that you indicate on the CIS/FDS the instances in which your figures are estimated, by keying-in the letters “est” next to your entries. Another approach, where estimations may be too attenuated, is to include the letters “TBD” (to be determined) next to any blank entries that might otherwise be filled in.

It is important to consider whether you want to distinguish between the needs of a spouse and the needs of children in the CIS/FDS. This may be difficult to accomplish early on in the pendente lite support phase of your case. In cases where the family continues to live at the same residence, making a distinction between spousal and child-related expenses may be unnecessary, since your client is still living in an intact family setting. In that case, what was done during the pre-complaint household is what should arguably continue. Case Information Statements/Financial Disclosure Statements filed when the family is still living together provide a useful baseline for marital lifestyle analyses. One might even consider drafting an adjunct CIS/FDS, reflecting what the intact family budget was, even after the parties have separated. Some juridictions (New Jersey, for example) have recently altered their reporting formats to provide for historical marital life-style figures, as well as for contrasting pendente lite budgetary figures.

The CIS/FDS requires us to accurately identify the number of people whose needs are to be addressed by the support request. After your client reviews the credit card statements, check register entries, etc. in order to get a handle on family expenses, the approximations arrived at are likely reflective of expenses relating to the intact family. If your client is attempting to approximate a budget for living separately — with or without children — adjustments need to be made. As the case gets older, it is increasingly important that these adjustments be made. One useful feature in allocating expenses — particularly when you are representing the payor spouse – is that you can clearly illustrate to the judge that your client has expenses too.

The allocation of expenses between parent and children also facilitates post-judgment review on applications for modification to both spousal and child support (if ease of future review is what you are going for).

Separating the Sums

As early as the pendente lite stage, the court must separate the sums needed for spousal support, versus those sums representing the needs of the children. Consider using additional budget sheets or columns to itemize your client's needs. It is our obligation to present information to the court — by way of evidence and testimony — that is supportive of the claim that certain expenses reflect the needs of the spouse versus those of the children. The court is required in many jurisdictions to make the determination of alimony before entering an award for child support. If we fail to present to the court a basis upon which to make the allocation between alimony and child support in such jurisdictions, then we have failed to present the alimony issue properly.

There is no easy way to allocate a child's expenses. It is much easier to subtract-out the expenses of the other spouse. There is no heuristic that can be mechanistically applied to calculate what portion of a family budget represents the child's needs and what portion represents those of the dependent spouse. We should generally shy away from the use of arbitrary percentages to calculate allocations, without some further persuasive proofs or testimony.

Housing

Avoid using an arbitrary percentage of the current housing costs. If three people are living under the same roof, do not assume that your client's expense is simply one-third of the total. Socio-economic studies have proven that, as the number of children increases, the marginal cost associated with each child does not rise in direct proportion. The needs of the dependent spouse are generally constant, regardless of the number of children. Do not forget about the many “pleasures” of home ownership, including the costs of broken plumbing, snow removal, leaky roofs and yard work. There are often cases where one spouse routinely did many of these things. (we have even heard a few husbands actually offer to continue doing lawn care and household maintenance, in lieu of paying alimony). Will the fact of this lost handy spouse result in additional expenses for the remaining spouse? Typically, it would.

In most households, continuing expenses associated with equipment and furnishings are quite predictable. Clients often overlook many of them, however. While the new clothes washer and the wall-length entertainment unit with flat-screen TV purchased last year may quickly come to mind, the smaller items such as bedding, window treatment and knickknacks often miss the cut. They do, however, add up.

Transportation

Include your client's car payment, leasing costs, registration and license fees (one-month pro rata portion, as with all non-monthly expenses), insurance, maintenance, fuel, and commuting expenses, if applicable. Identify the type of vehicle your client has typically driven over the past 3 to 5 years. Consider making adjustments if the car currently in use is typical of the marital lifestyle, or if it's an out-of-repair “clunker,” necessitated by current conditions. Consider also (for future reference) if it would be replaced during the alimony term. Remember that pendente lite applications do not happen in a vacuum. The ultimate desired outcome of your case must also be reflected in and consistent with your pendente lite application, including the supporting CIS/FDS.

Do not arbitrarily use a percentage of the automobile insurance cost (which is more than likely covered under a multiple car family policy) to arrive at your client's allocation. The cost to insure your client's car on an individual policy and in light of the driver's past experience will determine the actual cost of the automobile insurance. Both parties stand to have significantly different premiums when separate policies are used post-dissolution.

Personal Expenses

Always include a savings component, if appropriate. This is often omitted, even on final versions of the CIS/FDS. Determine if savings were a regular part of the marital lifestyle or will be needed to maintain lifestyle later on. If so, it should definitely be added as a budget item. Concerning expenses in general — particularly when you are representing the supported spouse — it is important to subtract-out expenses that are more closely related to your client. This is easier done with some consumption categories than with others. For example, a reasonable food budget for individual adults may vary widely on a case-by-case basis. Food budgets for children may be approximated by considering the number of children, their known eating habits, all in the context of the family's overall eating tendencies.

Your clients must train themselves to see their consumption habits through new eyes. Otherwise, a lot could get overlooked. Don't undervalue the costs of vacations — even short get-aways — entertainment and gifts. Direct your client to go back several years to arrive at an average representative of the marital lifestyle. How does one best present proofs of lifestyle? The more hard and precise the proofs, the easier it will be for the trial court to make a decision in your favor. Obtain the records that were used by the family, reflective of money spent prior to the separation, eg, credit card statements, check registers, and the like.

Client Mind Set

Another consideration in preparing the budget contained in the initial CIS/FDS concerns the fact that your client may not feel favorably disposed to making rational decisions with regard to his or her post-divorce life, especially early on in the pendente lite phase. The pendente lite budget, therefore, may not fairly and accurately address the actual post-judgment needs of your client. It is generally anticipated that the CIS/FDS will be amended, and typically mandated that parties are under a continuing duty to revise the statements as needed. The budget utilized in support of a pendente lite motion should therefore be annotated with language to the effect that the budget is subject to change.

It is usually necessary to prepare multiple budgets in any case involving alimony. The pendente lite budget will almost always differ from the budget presented at trial. Clients should begin focusing on their post-judgment plans early on, especially when the parties are still living under one roof. Will the marital home be sold? If not, who will remain? What will future employment involve? How will childcare be handled?

Conclusion

Competently drafted pendente lite applications — complete with thoughtfully crafted financial disclosure statements — set the stage for successful advocacy while documenting the quality of your professionalism.