Filing for divorce is scary no matter what your circumstances; it can be outright terrifying if you are not the spouse controlling the purse strings. Preventing one spouse or the other from hiding or wasting valuable assets and canceling insurance policies is a long-standing problem in divorce cases.
In the past, to reduce the risk of assets being dissipated or insurance being canceled, most family law attorneys would file a Mutual Financial Restraining Order at the onset of a case. Obtaining a financial restraining order used to be problematic. The notice requirements and procedures for obtaining an order varied depending on the county, or even the Judge within the county. Even after a Judge signed such a restraining order, the order had to be served before it was in effect.
To remedy these problems, the legislature created Senate Bill 801 effective as law January 1, 2004. Senate Bill 801 creates an automatic restraining order that goes into effect once a petition and summons for marital annulment, separation, or dissolution have been filed and served.
In short, the new law states that neither party can cancel or forgo payment of health, homeowner/renter, or automobile insurance policies that cover children or the opposing spouse. Further, the party in control of the policies may not change the beneficiaries listed under the policies.
The order further restrains the parties in that neither party is allowed to transfer, encumber, conceal, or dispose of property in which the other party is invested without express written consent of the opposing party or the court. The exception to this is if it can be proven that the action was taken in the “usual course of business or for necessities of life.” Neither party is allowed to make extraordinary expenditures without written notice and an accounting of the expenditure to the other party.
It is important to note that a party is allowed to make payments for certain purposes. For example, you are permitted to continue paying your regular bills and conduct business. Emergency or large expenditures are also permitted as long as notice and an accounting are given. A party may also pay taxes, mental health expenses, necessary child expenses, and attorney fees.
It is important that parties to a divorce be aware of this new law and act accordingly. If you are unsure about an action you are about to take regarding assets or insurance, consult with your attorney. There are sanctions for failing to abide by a court order. Asking now could save you a lot of time, money and worry later.