Senate Bill No. 16
Introduced By halligan
A Bill for an Act entitled: An Act requiring mandatory disclosure between parties of all assets and liabilities subject to equitable division of the marital estate in cases of marriage dissolution or nullity or legal separation; providing penalties for failure to comply; amending sections 40-4-201 and 40-4-208, MCA; and providing an applicability date.
WHEREAS, it is the policy of the State of Montana to:
(1) marshal, preserve, and protect marital estate assets and liabilities that exist at the date of separation in order to avoid dissipations of the marital estate before distribution;
(2) ensure fair and sufficient child and spousal support awards; and
(3) achieve an equitable division of marital estate assets and liabilities on the dissolution or nullity of marriage or legal separation of the parties, as provided under Montana law; and
WHEREAS, sound public policy further favors the reduction of the adversarial nature of marital dissolution and the attendant costs by fostering full disclosure and cooperative discovery; and
WHEREAS, in order to promote this public policy, a full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties, regardless of the characterization as joint or separate, together with a disclosure of all income and expenses of the parties; and
WHEREAS, each party has a continuing duty to update and augment material changes to that disclosure so that at the time that the parties enter into an agreement for the resolution of any of these issues or at the time of trial on these issues, each party will have as full and complete knowledge of the relevant underlying facts as is reasonably possible under the circumstances of the case without the need of formal discovery requests pursuant to the Montana Rules of Civil Procedure.
THEREFORE, the Legislature of the State of Montana finds it appropriate to enact the following provisions relating to disclosure of marital estate assets and liabilities.
Be it enacted by the Legislature of the State of Montana:
Section 1. Definitions. As used in [sections 1 through 8], the following definitions apply:
(1) "Asset" includes but is not limited to any real or personal property of any nature however and whenever acquired, whether the property is tangible or intangible, whether the property is currently existing or contingent, and whether the title is in the name of the husband or wife, or both.
(2) "Default judgment" does not include a stipulated judgment or any judgment pursuant to a marital settlement agreement.
(3) "Earnings and accumulations" includes income from any source.
(4) "Expenses" includes but is not limited to all personal living expenses, but does not include business-related expenses.
(5) "Liability" includes but is not limited to any debt or obligation, however and whenever acquired, whether the debt or obligation is currently existing or contingent or is in the name of the husband or wife, or both.
(6) "Marital estate" includes all assets and liabilities.
Section 2. Preliminary declaration of disclosure -- penalty. (1) Within 60 days of service of a petition for dissolution or nullity of marriage or for legal separation of the parties, each party shall serve on the other party a preliminary declaration of disclosure, executed under penalty of perjury. The parties may, by written stipulation or by oral stipulation made in open court, agree to change the time for exchange of preliminary declarations of disclosure.
(2) The preliminary declaration of disclosure may not be filed with the court, except on the court's order.
(3) The preliminary declaration of disclosure must set forth with sufficient particularity, which a person of reasonable and ordinary intelligence can ascertain, all of the following:
(a) the identity of all assets in which the declarant has or may have an interest and all liabilities for which the declarant is or may be liable, regardless of the characterization of an asset or liability; and
(b) the declarant's percentage of ownership in each asset and percentage of obligation for each liability when property is not solely owned by one or both of the parties. The preliminary declaration may also set forth the declarant's characterization of each asset or liability.
(4) A declarant may amend the declarant's preliminary declaration of disclosure without permission of the court.
(5) Along with the preliminary declaration of disclosure, each party shall provide the other party with a completed income and expense declaration unless an income and expense declaration has already been provided and is current and valid.
(6) In addition to any other civil or criminal remedy available under law for the commission of perjury, the court may set aside the judgment, or part of the judgment, if the court discovers that a party has committed perjury in the preliminary declaration of disclosure.
Section 3. Final declaration of disclosure -- failure to disclose current income and expense declaration -- penalty. (1) (a) Each party shall serve on the other party a final declaration of disclosure and a current income and expense declaration, executed under penalty of perjury:
(i) before or at the time that the parties enter into an agreement for the resolution of property or support issues, other than pendente lite support; or
(ii) in the event that the case goes to trial, no later than 45 days before the first assigned trial date.
(b) The parties may, by written stipulation or by oral stipulation made in open court, agree to change the time for exchange of final declarations of disclosure.
(2) The final declaration of disclosure must include all material facts and information regarding the:
(a) characterization of all assets and liabilities;
(b) valuation of all assets that are contended to be marital or for which it is contended that the marital estate has an interest;
(c) amounts of all obligations that are contended to be marital obligations or for which it is contended that the marital estate has liability; and
(d) expenses and earnings and accumulations of each party that have been set forth in the income and expense declaration.
(3) Along with the final declaration of disclosure, each party shall serve on the other party an updated income and expense declaration unless a current income and expense declaration is on file.
(4) The failure of a party to disclose an asset or liability on the final declaration of disclosure is presumed to be grounds for the court, without taking into account the equitable division of the marital estate, to award the undisclosed asset to the opposing party or the undisclosed liability to the noncomplying party.
(5) In addition to any other civil or criminal remedy available under law for the commission of perjury, the court may set aside the judgment, or part of the judgment, if the court discovers, within 5 years from the date of entry of judgment, that a party has committed perjury in the final declaration of disclosure.
Section 4. Execution and service of final declaration of disclosure and current income and expense declaration. Absent good cause, the court may not enter a judgment with respect to the parties' property rights unless each party has executed and served a copy of the final declaration of disclosure and current income and expense declaration. Each party shall execute and file with the court a declaration signed under penalty of perjury stating that service of the final declaration of disclosure and current income and expense declaration was made on the other party.
Section 5. Noncomplying declarations -- requests to comply -- remedies. (1) A party who has served on the other party a preliminary declaration of disclosure under [section 2] or a final declaration of disclosure under [section 3] and who has provided the information required in the declarations with sufficient particularity may, within a reasonable time, request from a noncomplying party preparation of the appropriate declaration of disclosure or further particularity in a declaration.
(2) If a noncomplying party fails to comply with a request under subsection (1), the complying party may file either or both of the following:
(a) a motion to compel a further response;
(b) a motion for an order preventing the noncomplying party from presenting evidence on issues that should have been covered in the declaration of disclosure.
(3) If a party fails to comply with any provision of [sections 1 through 8], the court shall, in addition to any other remedy provided by law, order the noncomplying party to pay to the complying party any reasonable attorney fees or costs incurred, or both, unless the court finds that the noncomplying party acted with substantial justification or that other circumstances make the imposition of the sanction unjust.
Section 6. Liquidation -- transfer of marital estate assets to avoid encumbrance, devaluation, or market or investment risk -- authority of court. (1) Except as provided in subsection (2), at any time during the proceedings, the court may, upon application of a party and for good cause and after consideration of the relative nature, scope, and extent of the marital estate, order the liquidation or transfer of title of marital estate assets to avoid unreasonable encumbrance, devaluation, or market or investment risk.
(2) The court may not grant an application under subsection (1) unless the appropriate declaration of disclosure has been served on the opposing party by the moving party as provided in [sections 2 through 4].
Section 7. Default judgments -- disclosures. In the case of a default judgment, a petitioner may waive the final disclosure requirements of [sections 3 and 4]. However, the petitioner shall comply with the preliminary declaration of disclosure requirements of [section 2].
Section 8. Attorney work product privilege -- protective orders -- Montana Rules of Civil Procedure. A disclosure required by [sections 2 through 4] does not abrogate the attorney work product privilege or the formal discovery procedures provided by the Montana Rules of Civil Procedure or does not impede the power of the court to issue protective orders.
Section 9. Section 40-4-201, MCA, is amended to read:
"40-4-201. Separation agreement. (1) To promote amicable settlement of disputes between parties to a marriage attendant upon their separation or the dissolution of their marriage, the parties may enter into a written separation agreement containing provisions for disposition of any property owned by either of them, maintenance of either of them, and support, custody, and visitation of their children.
In Subject to subsection (7), in a proceeding for dissolution of marriage or for legal separation, the terms of the
separation agreement, except those providing for the support, custody, and visitation of children, are binding upon the court
unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the
parties, on their own motion or on request of the court, that the separation agreement is unconscionable.
(3) If the court finds the separation agreement unconscionable, it may request the parties to submit a revised separation agreement or may make orders for the disposition of property, maintenance, and support.
(4) If the court finds that the separation agreement is not unconscionable as to disposition of property or maintenance and not unsatisfactory as to support:
(a) unless the separation agreement provides to the contrary, its terms
shall must be set forth in the decree of dissolution or
legal separation and the parties shall must be ordered to perform them; or
(b) if the separation agreement provides that its terms
shall may not be set forth in the decree, the decree shall must
identify the separation agreement and state that the court has found the terms not unconscionable.
(5) Terms of the agreement set forth in the decree are enforceable by all remedies available for enforcement of a judgment, including contempt, and are enforceable as contract terms.
(6) Except as provided in subsection (7) and except for terms concerning the support, custody, or visitation of children, the decree may expressly preclude or limit modification of terms set forth in the decree if the separation agreement so provides. Otherwise, terms of a separation agreement set forth in the decree are automatically modified by modification of the decree.
(7) The decree may be modified, as provided in [sections 1 through 8], for failure to disclose assets and liabilities."
Section 10. Section 40-4-208, MCA, is amended to read:
"40-4-208. Modification and termination of provisions for maintenance, support, and property disposition. (1) Except as otherwise provided in 40-4-201(6), a decree may be modified by a court as to maintenance or support only as to installments accruing subsequent to actual notice to the parties of the motion for modification.
Whenever Except as provided in [sections 1 through 8], whenever the decree proposed for modification does not
contain provisions relating to maintenance or support, modification under subsection (1) may only be made within 2 years
of the date of the decree.
Whenever Except as provided in [sections 1 through 8], whenever the decree proposed for modification contains
provisions relating to maintenance or support, modification under subsection (1) may only be made:
(i) upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable;
(ii) upon written consent of the parties; or
(iii) upon application by the department of public health and human services, whenever the department of public health
and human services is providing services under Title IV-D of the federal Social Security Act. The support obligation must
be modified, as appropriate, in accordance with the guidelines promulgated under 40-5-209.
A Except as provided in
[sections 1 through 8], a modification under this subsection may not be made within 12 months after the establishment of
the order or the most recent modification.
(c) The nonexistence of a medical support order, as defined in 40-5-804, or a violation of a medical support order justifies an immediate modification of child support in order to:
(i) provide for the actual or anticipated costs of the child's medical care;
(ii) provide or maintain a health benefit plan or individual health insurance coverage for the child; or
(iii) eliminate any credit for a medical support obligation when it has been permitted or used as a credit in the determination of the child support obligation.
(3) The provisions as to property disposition may not be revoked or modified by a court
(a) upon written consent of the parties; or
(b) if the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state.
(4) Unless otherwise agreed in writing or expressly provided in the decree, the obligation to pay future maintenance is terminated upon the death of either party or the remarriage of the party receiving maintenance.
(5) Provisions for the support of a child are terminated by emancipation of the child or the child's graduation from high school if the child is enrolled in high school, whichever occurs later, but in no event later than the child's 19th birthday, unless the termination date is extended or knowingly waived by written agreement or by an express provision of the decree. Provisions for the support of a child do not terminate upon the death of a parent obligated to support the child. When a parent obligated to pay support dies, the amount of support may be modified, revoked, or commuted to a lump-sum payment, to the extent just and appropriate in the circumstances.
(6) The decree may be modified, as provided in [sections 1 through 8], for failure to disclose assets and liabilities."
Section 11. Codification instruction. [Sections 1 through 8] are intended to be codified as an integral part of Title 40, chapter 4, and the provisions of Title 40, chapter 4, apply to [sections 1 through 8].
Section 12. Applicability. [This act] applies to proceedings commenced on or after October 1, 1997.