If you’ve practiced family law in South Carolina for any length of time and attended mandatory CLEs where one of the presenters was a South Carolina Court of Appeals judge, how many times have you heard that judge state (1) if the issue is related to equitable apportionment of the marital estate, then the family court judge’s order is required to have addressed in some form all of the “15 equitable apportionment factors” – or – (2) if the issue is related to alimony, then the family court judge’s order is required to have addressed in some form all of the “13 statutory alimony factors”?
And if you are the “prevailing attorney” and have been requested by your trial judge to prepare the proposed order, how would you explain to your client why the trial judge’s appealed order was “remanded” by an appellate court for (your?) failure to have expressly addressed these various, point-by-point “factors” in the order?
While remanding a case back to the family court can be costly to your client (if you’re continuing to charge a fee for this “scenario” which you may have created) and certainly time-consuming, a failure to have prepared and presented to your trial judge a client’s financial declaration which is accurate, truthful to the best knowledge of the client, thorough and thoroughly prepared (with annotations and footnotes, if necessary, or having an attached, detailed “marital assets addendum”) is a fatal error by the attorney, which can (and most often will) have a substantial effect on the financial issues decided by your trial judge.
And yet the financial declaration remains one of the most poorly prepared documents covering the entire spectrum of family court litigation.
As to this point, let me start by giving you just several examples of what I continue to encounter in reviewing financial declarations which have been sent to me in advance of a scheduled mediation:
- The husband has been working for the same company for approximately 25 years, during which span his 401(k) account has grown substantially. Of this 25-year span he was married for the last 10 years of it, and a divorce action was filed. As of the commencement date of the litigation the husband’s 401(k) balance is approximately $1.5 million; and in the husband’s sworn financial declaration his attorney has listed that entire balance under “All Marital Property Known To The Parties”. [I wonder how fast the wife’s attorney will assert that, because of the husband’s designation on this sworn document, the entire asset is “marital”, or the wife’s attorney will try to play the “transmutation card”? Also see the reference to the “Oconee Property” in Jenkins v. Jenkins, 345 S.C. 88, 545 S.E.2d 531 (Ct. App.2001)].
- A number of key sections (i.e., “value of all other property”), even in amended or subsequently filed financial declarations following the initial temporary hearing, remain marked with “to be determined” or “TBD”. [The failure to have more explicitly identified the marital asset, and certainly the failure to have placed any value by a marital asset, resulted in the following “Pandora’s Box” scenario: (1) by default, you allowed the “value” for that asset to be unilaterally determined either by the trial judge or, worse, by the opposing party, or (2) you allowed the trial judge, in his or her final order to make a specific finding that, by reason of your client’s failure to have provided a “value” for an identified marital asset, the judge was constrained to have accepted the opposing party’s value (you’ll most probably read this “finding” in the section of the order where the judge is addressing the equitable apportionment factors, see above).
- The amount of child support is at issue. Your client is self-employed and has registered with the Secretary of State as a corporate entity; the client has an accountant and annual income tax returns are filed which include either a Form 1099 or an IRS Form Schedule C (“Profit or Loss From Business”). The client’s financial declaration lists the gross income at $2,000 per month, but the Schedule C shows gross receipts less “reasonable and necessary (business) expenses” at approximately $80,000 per year. Clearly, the client’s gross monthly income has been misrepresented on the financial declaration. [See: Lafrance v. Lafrance, 370 S.C. 622, 636 S.E.2d 3 (Ct.App.2006), which held, in part: “Contrastively, in Patrick v. Britt, we agreed with the family court in its finding that the husband “purposefully arranged his finances in a manner that would make it difficult to determine his actual income.” 364 S.C. 508, 511, 613 S.E.2d 541, 542 (Ct. App. 2005). Husband was the owner and operator of a business that reported over $430,000.00 in income in 2002. Yet, he reported only $66.01 per month in income on his financial declaration, attributing his low income to high costs of running the business. Id. at 510, 613 S.E.2d at 542. The family court imputed income of $100,000.00 and we affirmed, based on the accountant’s evidence, the applicable law and Britt’s refusal to assist the court in resolving the issue. Id. at 513, 613 S.E.2d at 543 (citing Robinson v. Tyson, 319 S.C. 360, 364, 461 S.E.2d 397, 399 (Ct. App. 1995).]
If you have the time to finish reading this blog, then please take the time to review the following case law excerpts:
I’ll begin with Spreeuw v. Barker, 385 S.C. 45, 682 S.E.2d 843 (Ct. App.2009), which stated in part:
“The family court relied on the lone piece of credible evidence, Father’s 2001 financial declaration, in determining Father’s income for child-support purposes. We cannot conclude the family court abused its discretion in making this determination. See Kelley, 324 S.C. at 485, 477 S.E.2d at 729 (stating an abuse of discretion occurs when the court’s decision is controlled by some error of law or where the factual findings are without evidentiary support). In addition, Father only provided the court with a financial declaration to evidence his current income for 2002. Father’s testimony and the evidence presented at trial demonstrated his 2001 financial declaration understated his income for that year. Thus, the veracity of his 2002 financial declaration was also called into question. As a result, Father’s refusal to provide the family court with a meaningful representation of his current income precludes him from complaining of the family court’s ruling on appeal. See Patrick v. Britt, 364 S.C. 508, 513, 613 S.E.2d 541, 544 (Ct. App. 2005) (affirming the family court’s determination of Father’s income where he refused to provide the court with any meaningful representation of his current income). Lastly, even if the family court erred in determining Father’s gross income, such error was caused by Father’s failure to provide the court with accurate financial information. See Cox v. Cox, 290 S.C. 245, 248, 349 S.E.2d 92, 93 (Ct. App. 1986) (“A party cannot complain of an error which his own conduct has induced.”). Accordingly, we affirm the family court’s decision to impute income to Father.”
Also see Widman v. Widman, 348 S.C. 97, 557 S.E.2d 693 (Ct.App.2001), which stated in part:
“Wife asserts she complied with the January 25 order “as best she could,” given that the appraisals were incomplete. According to the January 11 order, Wife had until January 30 to complete the appraisals of the real property. However, Wife offers no excuse as to why she did not submit an updated financial declaration, complete with an asset addendum including the appraised values, as of January 30. The January 11 and January 25 orders clearly instructed the Wife to provide this information by that date. Further, there is no evidence Wife requested additional time from Husband or moved the court for additional time, based on an inability to complete the appraisals as ordered. In spite of the clear orders of the court, Wife waited to submit the proper financial declaration at the trial on February 16, thereby depriving Husband of an opportunity to completely prepare his case. Accordingly, we find the evidence supports the trial judge’s finding of willful contempt as to the financial declaration.”
Also see Lewin v. Lewin, 396 S.C. 349, 721 S.E.2d 1 (Ct.App.2012), which stated in part:
“In determining Father’s ability to pay, the family court found the only evidence of Father’s financial situation, his financial declaration, was not credible. Because Father failed to offer any accurate evidence of his income, we find the family court did not err in finding he had the ability to pay Mother’s attorney’s fees. See Spreeuw, 385 S.C. at 67, 682 S.E.2d at 854 (holding Father’s refusal to provide the family court with a meaningful representation of his current income precluded him from complaining of the family court’s ruling on appeal); id. (finding that “even if the family court erred in determining Father’s gross income, such error was caused by Father’s failure to provide the court with accurate financial information”).”
Finally, also see Engle v. Engle, 343 S.C. 444, 539 S.E.2d 712 (Ct.App.2000), which stated in part:
“Although the family court stated that the mother had presented no evidence to contradict the father’s claimed income on his financial declaration, we conclude the record establishes that the declarations were in fact inaccurate. The father claimed that his financial declaration reflected his earnings in the previous four months of June, July, August, and September 1998. The amount shown on the father’s financial declaration as his gross income is $6,239.71. However, the father’s pay stubs for those same four months record a total gross pay of $32,727.86, which averages $8,181.97 per month. The father’s financial declaration clearly is not reflective of his actual earnings. … When the amount reflected on the party’s financial declaration is in issue, the court may rely on other documentation.”
The cases which I’ve cited above are merely indicative of the close scrutiny given these financial declarations by the appellate courts; and, in each instance it can be argued that a flawed financial declaration submitted to the trial court resulted in some type of punitive result to the party who either took a cavalier approach to the importance of this trial document or who failed to comprehend the significance of the financial declaration in decision-making levels at both the trial court and appellate court stages.
A “clarion call” to all South Carolina family law attorneys within “the sound of my voice”: Please pay exceptionally close and careful attention to the preparation of your client’s financial declaration, and don’t be at all concerned that you might be “burdening” the trial judge with too much financial information [remember that you’re also protecting your hearing record(s) just in case you get an adverse decision]; and, finally, please do not merely view this document as “just another family court form”…for I assure you it is not.
And good luck out there.