March 15, 2011 § Leave a comment
You’re the judge. Which values do you think will have more credibility:
- Financial statement 1 has the family vehicles valued by the party at $800 (the car he wants) and $35,000 (the car that he wants the other party to have), unsupported by any authority; and
- Financial statement 2 that has Kelly Blue Book or NADA printouts from the internet showing values of $12,000 and $16,500?
Financial statement 2 will win the credibility battle every time.
When you are doing your responses to discovery, go to the Kelly Blue Book site or the N.A.D.A. site and enter the make, year model, mileage, condition and options for your client’s car. Use the “Used Car – Private Sale” figures, and print out the results. Include the printout with your discovery response as an attachment to the Rule 8.05 financial statement or in any other appropriate place. Then, when you are preparing for trial, make sure the printout is attached to the financial statement you are going to offer into evidence.
March 14, 2011 § 9 Comments
I posted here ten tips for more effective financial statements.
Here are a handful more to use in your quest for financial statement perfection:
- Number the pages. It saves the fumbling around as the witness and the court are trying to orient themselves to your questioning. And use the page numbers in questioning the witness: “Ms. Smith, look with me at page 3, line 6.” That’s a lot clearer and easier for a witness to follow than asking “Now you say you spend $200 a month on clothes for yourself; how did you come up with that?”
- Add or delete categories to meet your needs. Your client spends $65 a month buying yarn and other materials to feed her knitting habit. Why not replace an unused catergory like “Transportation (other than automobile)” with “Hobby Expenses.” It would be a whole lot clearer than lumping it in with household expenses or something else, and will make it easier for your nervous client to understand while testifying.
- Don’t list a deduction as “mandatory” when it is not. Deductions required by law, such as taxes and social security are excluded from adjusted gross income for calculation of child support. Voluntary contributions, such as 401(k) deductions, health insurance premiums, and the like are not excluded from income. When you list voluntary deductions as “mandatory,” you are at worst planting false information in the record, and at best confusing the record. Your client does not know the distinction. This is part of practicing law: advising your client how to properly fill out his or her 8.05.
- Attach a current pay stub. Pay stubs are a marvelous source of information. Quite often clients (and attorneys, I am sad to report) miscalculate income. A current pay stub, preferably with year-to-date (YTD) info is a great tool to check the income figures. Pay stubs also show the true amounts of overtime, bonuses, deductions for insurance and other items, andd retirement contributions.
- Tailor your 8.05 to the case you are trying. In a divorce case, you can have one column of figures showing your client’s current expenses, one showing the household expenses before the separation (to show standard of living), and a third column showing her anticipated expenses following the divorce. In a modification case, add a column on both the income and expense side showing what your client’s income and expenses were at the time of the judgment you are seeking to modify.
Of all the documents you admit into evidence at trial, the 8.05 is the one that the judge will study the closest and spend the most time poring over. Make it a workhorse for your case.
November 5, 2010 § Leave a comment
The Supreme Court yesterday entered an order amending Uniform Chancery Court Rule 8.05, in part. You can read the amended rule here.
In essence, the amended rule keeps in effect the financial statement with which we are all familiar, and adds a more detailed statement as an option to be used, “By agreement of the parties, or on motion and by order of the Court, or on the Court’s own motion … ”
Check out the more detailed form. There will likely be cases where it will be more suitable for your use than the original form.
October 14, 2010 § 4 Comments
In the case of Trim v. Trim, 33 So.3d 471 (Miss. 2010), the Mississippi Supreme Court held that “the intentional filing of a substantially false Rule 8.05 statement is misconduct that rises above mere nondisclosure of material facts to an adverse party,” and constitutes fraud upon the court.
So what is the significance of the Trim case for everyday practitioners?
Let’s say that your client isn’t deliriously happy with the outcome of her equitable distribution case, but she accepts it without an appeal. Ten months later she comes in to your office mad as a hornet with sheaves of paperwork that prove conclusively that her ex substantially understated on his 8.05 the value of financial assets that he controlled, and the gain to your client could be in the hundreds of thousands of dollars. Aha! You think, we have the sorry so-and-so right by the [indelicate word deleted]!
But wait. How are you going to get this before the court? MRCP Rule 59 relief expired 10 days after the judgment was entered, and the appeal time ran 30 days after entry. MRCP Rule 60 actions to set aside a judgment for fraud have to be brought within six months of the date of the judgment.
That’s where Trim comes in. By finding substantial misrepresentation on the 8.05 to be a fraud on the court, as opposed to fraud on the opposing party, the Supreme Court essentially ruled that there is no time limit to bringing an action to aside an action based on 8.05 fraud. That’s because MRCP Rule 60 expressly states: “This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court.”
Trim has ramifications for lawyers in Chancery. If you are in the habit of accepting your client’s 8.05 at face value without going over it with him or her, and without questioning behind it, you may be leaving your client open to an action to set aside that divorce judgment you thought you had laid to rest long ago. The client may well question why you never went over the statement with him and counseled him about what to include and what not to include. “My lawyer never told me that I had to list those three securities accounts; in fact, he never talked with me at all about what to include on the form.”
In case you think this is the kind of thing that happens to somebody else somewhere else, think again. Only this year, I set aside a divorce that was nearly two years old for substantial misrepresentation of financial assets that amounted to a fraud on the court. It can happen to you.
October 8, 2010 § 2 Comments
My 8.05 financial statements stink. How can I improve them?
Is my estate ready to close?
Check out this Checklist for Closing an Estate.
I think I need to file a habeas action. Any tips?
This Habeas Corpus Step by Step should help.
One more time: what are those child custody factors I need to prove at an upcoming trial?
The Albright factors are what you’re looking for.
Help! We need to sell some real property in an estate, and I don’t know where to start?
How to Sell Real Property in an Estate may be just what you need.
I’ve been asked to handle a minor’s settlement for a Jackson firm, and I’ve never done it before. What do I need to do?
This Outline for Handling a Minor’s Settlement will get you started.
My mail has an MRCP 41(d) notice in it this morning. I remember you said something about it, but I don’t have time to look for it. Can you remind me what I am supposed to do?
<Sigh> Here’s a post on what to do When Rule 41(d) Comes Knocking at Your Door.
I need to prove the tax effects of alimony, but my client can’t afford to hire a CPA to come testify. Any ideas on what I should do?
Try looking at Proving Tax Effects of Alimony.
My Chancery Judge is really nitpicky. How can I draft my adoption Complaint to satisfy him?
Are you talking about me? Whatever. Here is a post on pleading Jurisdiction for Adoption.
Every time I go to court in Jackson, the lawyers there snicker about my countryfied attire. Any suggestions? I cannot afford another $100 contempt citation for punching out a lawyer in the courtroom.
You probably need to be charging more so that you can afford either a better wardrobe or more contempt fines. Until you do, try reading “High Waters” and Burlap Suits. It won’t change anything, but it may help you to feel better.
August 24, 2010 § Leave a comment
The Supreme Court has posted proposed revisions to Uniform Chancery Court Rule 8.05 and your comments are invited.
There is, arguably, no Uniform Chancery Court Rule that affects Chancery practitioners more strongly than 8.05. If you have a position on this proposal, you need to make it known before final action. The deadline is September 20, 2010.
August 16, 2010 § 16 Comments
If your case involves economic issues or property division, Rule 8.05 of the Uniform Chancery Court Rules requires that you provide a financial statement complying with the form published in the rules.
An effective financial statement can make or break your case. It is the template for your client’s testimony, and a poorly-prepared statement will make your client cannon fodder for cross examination, while a well-prepared one will inoculate him or her from serious damage. Most importantly, the financial statement is what the judge will spend the most time mulling over when fashioning an opinion. The more effective your statement, the better off your case will be.
Here are ten ways you can make your Rule 8.05 statements more effective:
- Never present a financial statement that you have not gone over in detail with your client. As part of your trial preparation, question the client’s figures, test his or her mastery of the information on it. If your experience tells you that a figure is unreasonably high or low, question it and make the client defend it. If the client can not defend the number, suggest that the client reconsider it. And while you’re at it, make sure that your client knows what he or she included in every category. Are there duplications? For instance, if your client charges clothing for the children on her MasterCard, did she duplicate the amount paid on the card in the line for clothing? Don’t just take your client’s figures at face value; inquire about them. I once asked a woman on the witness stand how she came up with $480 a month for entertainment, and she explained that was the amount she had spent the month before for flowers for her aunt’s funeral, and that her sisters were going to reimburse her. When I asked what she usually spent on entertainment, she said $50. In one fell swoop, I lopped $430 a month off of her expenses, diminishing her alimony claim against my client. Her attorney had simply taken her word for the $480 expenditure without questioning behind it.
- Always have the statement typed so that it clearly presents your client’s position. A handwritten statement with scratched-out figures and marks, notations and arithmetic that doesn’t add up will just add confusion and make the judge’s job disagreeably more difficult. Take the time to type the figures in their proper places and make sure they add up properly. Remember the old adage: “The easier you make the judge’s job, the more likely it is you will prevail.” Okay, that’s probably not really an old adage, but it should be.
- Make sure the tax returns are attached. Copies of the preceding year’s state and federal income tax returns “in full form as filed” are required. This means that all schedules and w-2’s must be attached. If a document was sent with the original return to the IRS, a copy of it must be included.
- Have an adequate number of copies. “When offered in a trial or a conference, the party offering the disclosure statement shall provide a copy of the disclosure statement to the Court, the witness and opposing counsel.” This means that, in addition to the original in evidence, you should have three additional copies, plus one for yourself. It does your client absolutely no good for the court not to have a copy to look at while your client is being examined about it. It would even be a good idea to provide an extra copy for the judge to mark up with his or her own notes during testimony.
- Include a complete employment history. Some lawyers have deleted this from the form in their computers, for some reason, but it is specifically required in the rule: “A general statement of the providing party describing employment history and earnings from the inception of the marriage or from the date of the divorce, whichever is applicable.” This information is vitally important in connection with property division, alimony, child support and even child custody, and yet it is often omitted by lawyers.
- Be sure to explain any discrepancies. If your client has a perfectly logical explanation why the cell phone bill is $375 a month, be sure to cover it. If expenses exceed income, how is the client managing to pay the difference? If your client’s year-to-date income includes a one-time bonus that will never be repeated, notate that and have your client testify about it; if you don’t explain it, you can expect that the judge will include the bonus in your client’s income.
- Use an up-to-date statement. A financial statement prepared six months ago in discovery and not updated since is simply not a statement of “actual income and expenses and assets and liabilities,” as required in the rule. It defeats the purpose of the rule for a witness to spend a couple of hours explaining how the statement should be updated when that should have been done in trial preparation. If you come to court without an updated statement, the court may continue your trial to require you to prepare one.
- Have your client sign and date the statement. The Court of Appeals has been critical of unsigned financial statements.
- Make sure the entries really are what they say. A voluntary 401(k) contribution is not “mandatory retirement,” and should not be listed on that line. Nor is a private health insurance premium “mandatory insurance.” The term “mandatory” as used on the form refers to items required by law, such as PERS retirement.
- Remember that a month has more than four weeks. A month is 52 weeks divided by 12, or 4.3. A client who says “I get paid $400 every Friday, so I make $1,600 a month” is wrong; the correct amount would be $1,720.