What’s the difference between Rule 401 and Rule 410?
Upon filing a Complaint for Divorce in Massachusetts, two important court rules apply to both spouses - Supplemental Probate and Family Court Rule 401, and Supplemental Probate and Family Court Rule 410. Both rules require certain financial information to be disclosed and exchanged between spouses as part of the divorce process. Stated simply, Rule 401 addresses financial statements that each party in a divorce must complete, exchange, and file with the court, and Rule 410 addresses certain existing financial documents that each party in a divorce must gather and exchange.
What is Supplemental Probate and Family Court Rule 401?
Rule 401 addresses financial statements and provides that within 45 days from service of the divorce summons, spouses must exchange complete and accurate financial statements detailing their assets, liabilities, income and expenses. This disclosure is done on a specific form issued by the court. An individual making less than $75,000 annually is required to complete a short form financial statement. An individual making $75,000 or more annually must complete a long form financial statement, and also must have their signature witnessed by a notary. All financial statements must be signed under the pains and penalties of perjury, so it is important in completing a financial statement that it is filled out completely and accurately. If an individual is represented by an attorney, that attorney must sign the financial statement as well; the attorney affirms that they have no knowledge that any of the information contained in the financial statement is false.
Once a party seeking a divorce completes an initial financial statement in their divorce, they must be prepared to regularly update their financial statement throughout the pendency of the divorce case. Rule 401 provides that at any point during the case, a party can make a Request for Financial Statement, in which the other party is required to produce an updated financial statement within 10 days. Additionally, any time a hearing is held in a divorce case where financial matters are addressed, whether that be a motion hearing, pre-trial conference, trial, or uncontested final hearing, the court will require each party to file a current financial statement. Most divorces in Massachusetts are ultimately resolved with the parties reaching an agreement on all divorce issues, and filing a written agreement with the court. In order for the judge to approve the parties’ agreement, and grant the divorce, the sitting judge will ask each party under oath if they have completed their financial statement completely and accurately, and whether they believe their spouse has done the same.
Rule 401 Financial Statements: In Depth
As stated above, in a divorce, whether uncontested or contested, each spouse must file a financial statement. A financial statement will disclose income, assets, expenses and liabilities. Each financial statement will be signed under the pains and penalties of perjury. Therefore, it is imperative that each party accurately and completely discloses all financial information. Failure to fully disclose all financial information may result in perjuring oneself before the court. If perjury occurs, it may result in a loss of credibility in the eyes of the Judge and in a modification of any Divorce Agreement that you enter into, including possible forfeiture of assets not disclosed thereon.
Short Form vs Long Form
- If you earn less than $75,000.00 per year you must complete the Short Form Financial Statement.
- If you earn $75,000.00 per year or more, you must complete the Long Form Financial Statement.
There are also supplemental schedules to the document on which you must disclose any self-employment or rental income and expenses.
Why must I file a Financial Statement?
The financial statements filed by you and your spouse will be the basis of support orders, division of assets and division of debt. The court will require a signed financial statement to be filed at every court hearing and/or at the Uncontested Hearing.
What is contained in a Financial Statement?
Income: Income from all sources must be disclosed. This includes income from salary, self-employment, bonus income, interest and dividends.
Expenses: Your expenses shall be disclosed as accurately as possible. The expense section shall show a realistic picture of what your expenses are. It should not be over or understated, but should be the best approximation based on your personal knowledge.
Assets: All assets in your name shall be disclosed including real estate, bank accounts, investment accounts, retirement accounts, and the like. This shall include any assets you hold jointly.
Liabilities: All liabilities in your name shall be accurately disclosed, including but not limited to personal loans, credit card debt, medical bills, and the like. Even if you are not making any payments on said loans, it is important that they included with an explanatory note as to when the debt incurred and the reason or said debt.
What is Supplemental Probate and Family Court Rule 410?
Rule 410 addresses mandatory self-disclosure of certain existing financial documents. Similar to Rule 401, Rule 410 enacts a deadline of 45 days from service of the divorce summons. Rule 410 requires that the following documents be exchanged between the parties within 45 days:
- The parties’ federal and state income tax returns for the past 3 years, along with returns for any non-public, limited partnership, and privately held corporate returns for any entity in which a party has an interest, together with all supporting documentation, such as W-2s, 1099s, and the like;
- 4 most recent paystubs;
- Documentation regarding the cost and nature of available health insurance coverage;
- Statements for the past 3 years for all bank accounts held individually, jointly, in the name of another person for the benefit of a party, or held by either party for the benefit of the minor children
- Statements for the past 3 years for any securities, stocks, bonds, notes or obligations, certificates of deposit owned or held by either party or held for the benefit of the minor children, as well as pension and retirement plan statements
- All loan and mortgage applications prepared within the 3 years before filing of the divorce complaint
- Copies of any financial statements or other statements of assets and liabilities prepared within the 3 years prior to the filing of the divorce complaint.
What’s Next After the Exchange of Rule 401 Financial Statements and Rule 410 Mandatory Self-Disclosure Documents?
As addressed, both Rule 401 and Rule 410 require that these documents be produced within 45 days of service of the divorce complaint. The information obtained through Rule 401 and Rule 410 provide valuable information regarding the financial circumstances of the parties that ultimately must be addressed in order to finalize a divorce, whether that be by negotiated agreement between the parties and their attorneys, or by the court following trial. In some cases these initial financial disclosures may provide sufficient financial information for the parties and their attorneys to begin to discuss what a fair and equitable division of assets and liabilities may be, and to address what an appropriate level of support may be, if alimony or child support is needed. In other cases, these initial financial disclosures may provide some basic information, but additional information may be necessary to be obtained, which can be done by a process called discovery. It is important that once Rule 401 Financial Statements and Rule 410 documents are exchanged, that each party carefully review the documents provided by the other party and evaluate with their attorney whether additional discovery should be done. Additional information can be obtained through discovery methods including but not limited to the following:
- Appraisals: A certified appraiser can be retained to give their opinion as to the fair market value of assets, such as the value of the marital home or a business owned by the parties.
- Subpoenas: A person or institution can be required to produce certain documents through subpoena. A party may subpoena their spouse’s employer to obtain employment records, or a subpoena may be issued to a financial institution for bank or retirement statements.
- Interrogatories: Each spouse may issue interrogatories to the other party requesting that the other party answer questions under oath.
- Request for the Production of Documents: A spouse may request that the other party produce additional documents that may be relevant to the divorce case.
- Depositions: Each spouse may take the deposition of the other party or other witnesses that may have pertinent information regarding the divorce case. A party being deposed must answer questions under oath before a stenographer who will record the testimony.
What is Rule 411: Automatic Restraining Order?
In any Massachusetts divorce case filed in court, or when a complaint for separate support is filed, an "automatic restraining order" is in place. This is not what most think of when they hear the words "restraining order," but rather is a restraint on dissipating assets, and prohibits divorcing spouses from incurring debt in each others’ names, cancelling health insurance, life insurance, car insurance, etc. Exceptions to this rule are what you may expect- such as retaining an attorney, and covering reasonable living expenses. The automatic restraining order, which is ordered as Massachusetts Supplemental Probate and Family Court Rule 411, outlines the following:
- Neither party shall sell, transfer, encumber, conceal, assign, remove or in any way dispose of any property, real or personal, belonging to or acquired by, either party, except:
- as required for reasonable expenses of living;
- in the ordinary and usual course of business;
- in the ordinary and usual course of investing;
- for payment of reasonable attorney's fees and costs in connection with the action;
written agreement of both parties; or
- by order of the court.
- Neither party shall incur any further debts that would burden the credit of the other party, including but not limited to further borrowing against any credit line secured by the marital residence or unreasonably using credit cards or cash advances against credit or bank cards.
- Neither party shall directly or indirectly change the beneficiary of any life insurance policy, pension or retirement plan, or pension or retirement investment account, except with the written consent of the other party or by order of the court.
- Neither party shall directly or indirectly cause the other party or the minor child(ren) to be removed from coverage under an existing insurance policy, including medical, dental, life, automobile, and disability insurance. The parties shall maintain all insurance coverage in full force and effect.”
It is important that the parties to a divorce action are aware of this court order so that they do not violate the terms, which could expose the violating party to court sanctions.
When does this automatic restraining order go into effect?
This order goes into effect upon the Plaintiff-spouse filing the complaint for divorce and goes into effect for the Defendant-spouse upon service of the complaint and summons. The automatic restraining order remains in effect until the completion of the divorce action, unless modified by agreement of the parties or order of the Court.
To ensure that your Financial Statement is accurately and properly drafted, you should consult with an experienced family law attorney. If you have questions about the Rule 411 Automatic Restraining Order and how it may pertain to your individual situation, you should contact an attorney.
To speak with a lawyer about a prenuptial agreement, contact Mavrides Law in Boston, MA. To schedule an in-depth initial consultation, call 617-723-9900 or contact the firm at email@example.com
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