The Case Information Statement ("CIS") is one of the most important documents prepared in a matrimonial matter. A CIS is needed whether your client intends to mediate, arbitrate, litigate or simply resolve a case with his/her spouse directly. Before attempting to resolve any matrimonial case, it is imperative that the parties, counsel, any mediator or arbitrator fully understand the parties' incomes, expenses, assets and debts. The CIS is designed to provide all of this information in one legal document. I often refer to the CIS as a client's bible. It also is a necessary document to maintain as past CISes are needed in most post-judgment proceedings. A well-prepared CIS will save your client significant legal fees throughout the matrimonial proceeding.
This article was first published in the “2012 Family Law Symposium."
In order to understand the complexity of this document, I encourage you to prepare your own CIS. Not only will you be surprised at how much you might spend on certain expenses, but it will give you an understanding and appreciation of the efforts our clients go through in completing this document. In order to assist you in effectively preparing your client's CIS, this article will provide you with several practice tips.
1. AN ATTORNEY SHOULD BE INVOLVED IN PREPARING THE CIS
Who is preparing your client's CIS? Is it your paralegal? The client? Your office manager? Regardless of who prepares the initial draft of the CIS, it is imperative that an attorney be involved in finalizing the preparation of the CIS. As the CIS contains information regarding the client and his/her spouse's income(s), expenses, assets and debts, to begin, a client should prepare a draft of the CIS. It takes time and patience. A client who may never have had to pay attention to the family expenses will now begin to understand how much money is needed to run his/her household. In addition, as it is a client who will ultimately need to accept a settlement, they must have a true appreciation for their income, their spouse's income, the family expenses and the marital assets and debts. They need to be involved in the process in order for this to occur.
Once the client prepares a draft of the CIS, a paralegal should enter the information into your software program. Then, the attorney should review the CIS and send the client a letter with comments and questions. Thereafter, schedule a time to meet with the client to review those comments and questions. During this meeting, review these questions with the client line by line, and review the back up data, such as tax returns, paystubs, bank and retirement statements, mortgage statements, and credit card statements to confirm that the CIS is factually correct. Too often, a client may use the prior month's balance for an IRA statement or list only the balance of one account and not the balance of all three combined balances on the account statement. Sometimes, the balances are outdated by the time that you meet with the client. Even worse, a client may check off that custody is in dispute when it is parenting time and not custody that is in dispute. This error will unnecessarily add tension to a matrimonial case. These simple errors can be avoided by having an attorney meet with a client to discuss all the data imputed onto the CIS. I have heard Judges state that an attorney's request for counsel fees at trial can be jeopardized when there are simple errors on the client's CIS that could have been easily avoided.
Practice Tip: Take the time to work with your client to review all of the data on the CIS for accuracy.
2. USE THE CIS TO ADVOCATE FOR YOUR CLIENT
While all of the data on a CIS must of course be completely accurate, the means in which you present this information can make a difference in the outcome of your client's case. As attorneys, one of our best skills is our ability to advocate for a client. Apply this skill in preparing your client's CIS. Some of the areas where you can effectively advocate for your client are:
Explanation of Income:
Whether a client earns $700,000 a year or $200,000 a year will make a significant different in determining support. When you represent the moneyed spouse and the spouse's income is comprised of a base salary, bonus, commissions and/or restricted stock units, it is important to breakout this income on the CIS. By breaking out this income, it provides an opportunity for support to be structured based on the moneyed spouse's income when and if it is received rather than on the entire amount of income. Attached to this article as Example 1 are two CISes for the same client reflecting the different perception when a client's income is broken into his/her respective components and when it is lumped together as one figure. In order to perform this task, you will need your client's most current paystubs as well as any paystubs reflecting the actual bonus, commissions, and/or restricted stock units. These different paystubs are needed so that you can not only break out the gross income on page 3 of the CIS but also deductions attributable to these additional income components. Attached as Example 2 is another sample of CIS pages which breaks down a client's income.
When you represent a client who has lost his/her job or has notice that a termination will be forthcoming, explain that last year's income and/or the client's year to date income is not reflective of the client's current employment situation as he/she has been or will be terminated effective by a (certain date).
Just because you represent the non-moneyed spouse does not mean that you should skip over the bottom of page 2 and pages 3 and 4 of the CIS. If you can secure information regarding the moneyed spouse's weekly income, that should be included at the bottom of page 2.
If you represent the non-moneyed spouse and your client believes that his/her spouse's recent decline in income was voluntary, this should similarly be reflected in the explanation of income.
If you represent the non-moneyed spouse and he/she has recently re-entered the workforce, these efforts should be reflected in the explanation of income.
Detail of Monthly Expenses: No two budgets are alike. However, Judges and mediators are human. If your client has a monthly expense which appears to be higher or lower than average, then footnote the basis for this expense. A few examples of where this would be helpful are as follows: Schedule A Expenses:
If a family's mortgage/HELOC recently declined because of a refinance, footnote this savings to reflect that these funds are now available to pay for other expenses, such as a spouse's apartment if your client is seeking to have his/her spouse move out of the marital residence;
If a family's heating bill is excessive because of a cold winter, note that fact.
When determining snow removal and lawn care expenses, remember that the monthly summer bill of $500 for spring cleanup and mowing the lawn four times in July is only one of 12 months in the year. Your client needs to obtain records of all payments to the gardener for the prior 12 month period and this expense should be amortized. Also, the snow care expenses for last winter will likely be significantly higher than these expenses for this winter.
If your client's repair expenses are excessive because of recently replacing certain large items in the house, such as the boiler or air conditioner, note this expense as this is a non-recurring expense.
Schedule B Expenses:
Make sure to include anticipated expenses. For example, if your client is due for a new car, reflect this anticipated expense. By further example, if you represent the non-moneyed spouse who will need to pay for medical insurance after the divorce, have your client estimate this monthly expense.
If your client spends a lot of money on fuel and oil for her car because she shuttles the kids around the state for travel hockey practice and games, note this fact;
Schedule C Expenses:
Perhaps the family spends $2,000 a month for food because of a child's specific eating restrictions and/or food allergies. It is important to document this fact in the CIS;
It is important to note any charitable contributions paid by the clients during their marriage. You can often find a figure on the client's tax return reflecting their annual contributions to discuss with your client;
If a vacation expense is high because a client has relatives in China, note how often the family travels to China to visit these relatives under the vacation expense;
If the child's sports and hobby expenses are excessive because the child participates in several activities, consider attaching a spreadsheet detailing these expenses;
As savings can be a component of lifestyle, if the family traditionally saved money in 401(k), IRAs, 529s, or brokerage accounts, you should include this expense in the client's budget. If this figure is unknown, you can simply state "to be determined." Do not leave it blank;
In determining debt service, the CIS program will automatically include the monthly amount of the debt listed on page 8 of the CIS. If you have already included this debt in other categories in the CIS such as the monthly mortgage payment, HELOC payment, this debt has already been accounted for and should not be double-counted. With regard to credit cards, there are annual service charges and perhaps monthly fees and interest associated with carrying credit card debt. These expenses should be listed separately on the CIS. However, use caution not to use the monthly credit card minimum payment to capture these expenses. As most of a client's Schedule C expenses may be paid on credit cards, to do so would be a double dip.
If you have a client who anticipates receiving alimony, then the amount of his/her tax reserve is ‘to be determined." If the parties pay quarterly estimated tax payments, these figures should be included in the CIS.
If one spouse has life insurance that is not paid through employment, include the premium payments in the monthly budget;
Take advantage of the other category by itemizing expenses not included in Schedule A, B or C. This might include expenses for a sick pet. However if the pet has passed away, that should be noted as these expenses are non-recurring. I encourage you to attach a spreadsheet detailing the other category.
A misc expense on the CIS is likely to be viewed as redundant. For example, the client that takes $500 cash out of the ATM each week most likely uses this money on food, non-prescription drugs and other items listed in Schedule C.
Attached as Examples 3 and 4 are two sample monthly budgets which include several footnotes to reflect the effectiveness of this method of preparation.
Disclosure of Assets and Debts: In order to resolve the equitable distribution part of any case, the clients must first identify the marital assets, determine their value and then determine a distribution. While your client's CIS will not be determinative of the values of the marital assets and debts, it provides a means for your client to advocate his/her position on each asset. It is important to note separate property claims in the middle column.
Real Property
When listing the client's real property in an initial CIS, there is debate as to whether your client should list values for these assets. I generally prefer to list estimated values for these assets with a notation that "the properties are subject to appraisals"
A client can obtain a Comparative Market Analysis from a real estate broker in order to provide an estimate of value (with an understanding that the asset is still subject to appraisals). This is important even if the clients agree to sell the properties as it is important for the clients, counsel, a mediator or Judge to have some understanding of the extent of the value of the real property. Also, sometimes, home equity lines of credit need to be obtained to fund litigation costs which will not be an option if there is no or negative equity in the client's real property.
Bank Accounts, CDS/Stock and Bonds
If the clients have an account(s) used solely to pay expenses and there generally is not a balance maintained in the account, indicate that this account fluctuates. To list the highest balance in this account(s) during a given month is disingenuous;
If one spouse made a large withdrawal from an account for non-marital purposes, when listing the balance in that account, list the higher balance and note that the spouse withdrew x from the account on [date] for a non-marital purpose;
If a payment needs to be made from an account, for an estimated tax payment, then note this fact;
Cars
Only cars that are owned by a client need to be included on the CIS. A leased car is not an asset and similar to a apartment rented by a client should not be reflected as an asset;
Ask your client to provide estimated values for their vehicles from kellybluebook.com. This website will ask many questions about the vehicle, including make, model, mileage, features and condition of the vehicles – which provides another area subject to debate;
Tangible Personal Property
Generally, include a blanket disclosure of personal property, household furnishings, artwork, jewelry, and collections. However, if there is a specific item or two of personal property which is significant, reflect this item with an estimate of its value, if known;
Retirement Assets
To the extent that a termination date has been agreed to or a Complaint For Divorce has been filed, I suggest using a statement value as close to this date as possible;
Note any portion of retirement asserts which include premarital assets;
Debts:
If a client borrowed money from a family member to pay his/her legal fee retainer, then be sure to reflect this debt on the CIS;
If a client received a forgivable loan from an employer that was deposited into a marital asset but the client risks having to return a portion of these funds if he/she leaves his employment prior to the full forgiveness period, note this fact as a contingent liability on the CIS.
Attached as Example 5 is a sample page from a CIS reflecting how a detailed explanation of assets and debt can benefit your client.
Practice Tip: Use the CIS to advocate for your client by explaining any changes in income, assets, debts, expenses and explaining any extraordinary expenses.
3. PROVIDE EXHIBITS TO YOUR CIS
Not only should you verify the data relied upon by your client, but attach this data as exhibits to your client's CIS. Page 9 of the CIS requires certain documents to be attached to the CIS such as paystubs, tax returns, corporate benefit statements, etc. However, this list is not exhaustive. Unlike a Certification which has page limits, there are no page limitations to a CIS or attachments to a CIS.
By attaching documents to confirm the data on your client's CIS, you can minimize the discovery that your client will need to provide in the future, and be fully prepared at all stages of your client's case. We have all been in Court or mediation when one of the values of assets listed on the CIS has been questioned by an adversary, the mediator or a Judge. By attaching these statements to your CIS, you will be readily prepared to respond to these questions.
In addition, documentation to support certain facts detailed on the CIS will enhance your client's credibility. Below is a list of the documents that should be attached to your clients' CISes.
December 30th paystubs;
W-2s for prior year;
Federal and State income tax returns for the prior year;
SSA statements (if available);
Last three current paystubs;
Quicken records detailing monthly expenses;
Excel spreadsheet detailing the "other" category of monthly expenses;
Comparative Market Analyses or appraisals of mortgages;
Bank and Brokerage statements;
Brokerage statements reflecting separate property (premarital or gifted components of asset);
Bluebook values;
Retirement Statements reflecting current values;
Retirement statements reflecting separate property (premarital statements);
Note receivables;
529 Plan/Custodial Account statements for children;
Mortgage/HELOC statements;
Car loan statements;
Recent credit card statements;
Notes reflecting monies owed to third parties; and
Forgivable loan documents;
Practice Tip: Gain credibility, be organized, thorough and prepared by attaching exhibits to your client's CIS.
4. STATEMENT OF SPECIAL PROBLEMS:
Part F of the CIS (Page 9) requests that a client detail a list of any special problems. This is an open invitation to advocate for your client. If you represent the stay at home spouse who has no knowledge or discovery regarding the parties' finances, this should be detailed in this section of the CIS. Similarly, if a client is earning less income than his/her historical income, use this section to provide an average of the client's last several years of income to provide an income history. If the parties have been separated for several years, then use this section to reference that the marital partnership terminated many years ago and that the laws in New Jersey are laws of equitable distribution, not equal distribution.
Practice Tip:Use the Statement of Special Problems to provide to argue subjectively for your client
5. TIMING FOR FILING CASE INFORMATION STATEMENTS
Pursuant to Rule 5:5-2(b), a CIS is required to be filed twenty (20) days after the filing of an Answer or Appearance (unless a CIS is not required to be filed in which case a statement stating same should be filed). Parties are under a continuing duty to amend their CISes to reflect any material changes in the information supplied therein. In addition, CISes are required to be updated at least twenty (20) days prior to trial. If a client does not abide by this timeframe, a client can be prohibited from introducing evidence at trial that was timely disclosed in a CIS.
Pursuant to Rule 5:5-2(f), CISes are to be kept confidential and therefore not open for public viewing. However, in filing your CISes, all of the client's confidential information should be redacted. For example, redact account numbers, and social security numbers from tax returns. While this redaction is not required given the confidential nature of CISes, as CISes are often filed with the Court as attachments to Certifications for support or post judgment relief, it is easier to redact this information as a general rule than to ensure that it is redacted at the time that the CIS is filed as an attachment to a Certification. The Certification is confidential. Given the sensitive nature of these materials, why not err on the side of caution.
Practice Tip: Remember to file your client's CIS 20 days after an Answer is filed and 20 days prior to trial.
6. UPDATING YOUR CLIENT'S CIS FOR TRIAL
Pursuant to Rule 5.5.2(2), a client is required to file and serve an updated CIS 20 days prior to trial. By the time that the clients reach the stage of the litigation when they are updating their CISes, there should no longer be any uncertainty as to income, expenses and assets and debts. By this time, discovery has been exchanged and appraisals/valuations obtained. In the event that this is not the case, your client's trial CIS should reflect why they are unable to provide the missing information. For example, did their spouse block their ability to obtain an appraisal of the marital residence or not provide full discovery as to his/her business interest? If so, rather than just indicate a "TBD" on the CIS, footnote the reasons why you are unable to provide this information at this juncture of the case (and hopefully the judge is aware of this problem either through a pretrial conference or motion practice). Whereas an initial CIS may reflect a "TBD" for asset or debt valuations, generally, a trial CIS should not reflect this notation.
The updated trial CIS now serves as your client's wish list for purposes of the litigation. It is imperative that the client be familiar and agrees with each item listed on the CIS as it is your client who has certified to this information. Not only will your client have to certify to this information, but he/she will be subject to cross-examination on her/his CIS. If there are problem areas on the CIS, now is the time to review this information with the client so he/she is effectively prepared for trial. For example, if your client's monthly expenses are higher than the parties combined monthly incomes, your client needs to be prepared to explain the reason for this inconsistency. Perhaps the parties always lived off of credit card or home equity line of credit and then paid off this debt with one party's annual bonus. Perhaps that party's bonus was significantly reduced, therefore leaving significant marital debt. These facts are very common among our clients' today. If your client falls into this majority, then use the Statement of Explanation to provide answers to the questions. Do not leave the uncertainty to a guessing game at trial. Nothing goes exactly as planned at trial. If you can use the CIS to provide some of this explanation, it will provide a road map for your client and the Judge at trial.
If the updated trial CIS is materially different from the initial CIS, then the client will need to explain these disparities. Again, use the Statement of Reasons to provide explanations. Perhaps your client thought that the family budget was significantly less than the actual budget. In such a case, now that discovery has been exchanged, explain this rationale for the inconsistencies in the Statement of Reasons. You must expect that your adversary will compare the initial CIS to your client's trial CIS at the time of trial and use any inconsistencies to attack the client's credibility. Preempt these potential areas of downfall by preparing your client and using the CIS as a road map.
Practice Tip: A trial CIS should serve as a tool to advocate for your client's wish list. Any inconsistencies between the initial CIS and the trial CIS should be explained in the Statement of Explanation to provide a road map for your client's testimony at trial.
7. PREPARING A POST-JUDGMENT CIS
After the conclusion of any matrimonial matter, it is imperative that the clients preserve their CISes. CISes need to be preserved for any post-judgment application. In a post-judgment application regarding a modification of support, a client must submit his/her prior CIS filed at the time of the divorce as well as an updated CIS. In the years since a client's divorce, circumstances will change. Incomes may increase or decrease. Regardless of the facts, how you present them in a post-judgment CIS is critical to your client's success.
If you represent the moneyed spouse and you are submitting a post-judgment application for a reduction in his/her support obligations, then it is critical that the CIS reflect the decline in your client's income. If your client's income has been declining since the parties' divorce, state these facts in the Statement of Special Reasons. You should also consider attaching your client's W-2s, income tax returns and/or excel spreadsheet summarizing his/her income for the last several years. This summary should breakout the income into the different components – base gross salary, gross bonus, gross commissions, gross restricted stock units/stock option income, and gross deferred comp. These explanations will then be very useful as a reference guide in your client's Certification and in preparing for oral argument on his/her application.
In addition, if you represent the moneyed spouse seeking relief from his/her support obligations, you must also consider how his/her expenses compare to the expenses listed on the CIS at the time of the divorce. If your client is maintaining a standard of living close to the marital lifestyle, you may have difficulty convincing a Judge that a modification is warranted. Perhaps this can be explained because a new spouse is contributing to expenses, or your client is continuing to incur debt.
When preparing the moneyed spouse's CIS, be careful to note any assets that existed during the marriage and were retained by your client as his/her share of equitable distribution. If your client has significant assets, he/she may be compelled to use these assets to contribute to his/her support obligation. If, however, these assets are equal to assets retained by the non-moneyed spouse as his/her share of equitable distribution, then the parties' assets should off-set one another. By identifying your client's share of equitable distribution in the CIS, you are preempting this issue at the outset.
If you represent the non-moneyed spouse and you are defending a post- judgment modification application, then your client's CIS should be a guide to how your client is no longer able to maintain the marital lifestyle. Perhaps certain expenses have increased as the children are now older. If that is the case, then explain these facts by using footnotes in the CIS. If your client's income has increased since the time of the divorce but it is not recurring income, note this fact on pages 2 and 3 of the CIS. If your client's debt has increased since the time of the parties' divorce, note this on page 9 of the CIS to evidence that the current support arrangement is not even sufficient for your client.
When a client to a post-judgment modification application is remarried, be sure to reference only his/her income on the CIS breaking out the income of the new spouse. It is also important to note any assets and debts which are jointly owned by the party and the new spouse.
Practice Tip: A post-judgment CIS should be used to explain differences between the prior CIS, to highlight your client's share of equitable distribution, breakout any income and assets of a new spouse and highlight areas of increased expenses.
Conclusion
In sum, whether you are preparing a CIS for mediation, arbitration, a four-way meeting, trial, or a post judgment proceeding, take the time and exert the effort to do it right the first time. By avoiding errors, providing backup data and explaining any irregularities, you will be providing a roadmap for your client's case. The more work that a client can do with his/her CIS, the more the client can conserve legal fees in the process. A good, thorough and documented CIS is an invaluable part of any matrimonial matter.