What is Mandatory Disclosure?Nov 20, 2017
Absent agreement to the contrary, parties to family-related litigation are required to exchange certain information very early in the case. This requirement is known as “mandatory disclosure.” A mandatory disclosure is designed to facilitate the early evaluation of a case and enhance the possibility of early case settlement. The exchange of this basic information also eliminates the cost and delay associated with issuing specific requests for necessary documents.
Mandatory disclosures must be exchanged within 45 days from the date on which the non-filing party was served with notice of the action. If a hearing is scheduled before that time, the mandatory disclosures are due earlier and must be exchanged 10 days before the hearing. The information that must be exchanged differs by the type of case filed. For example, the mandatory disclosures in a divorce action are different from those in a post-divorce parenting-related action. The mandatory disclosures for a divorce action are the most comprehensive. Those disclosures include the following:
- A current financial affidavit and expense sheet.
- Past three (3) years’ personal and business federal and state income tax returns
- All tax return schedules, including but not limited to W-2s, 1099s, 1098s, K-1s, Schedule C, Schedule E and any other schedules filed with the IRS.
- Four (4) most recent pay stubs (or equivalent documentation) from each current employer, and the year-end pay stub (or equivalent documentation) for the prior year
- For business owners or self-employed parties, all monthly, quarterly and year-to-date financial statements to include profit and loss, balance sheet and income statements for the year in which the action was filed; and all year-end financial statements for the calendar year that concluded prior to the filing of the action.
- Documentation confirming the cost and status of enrollment of employer provided medical and dental insurance coverage for the party, spouse and dependent children.
- Any written prenuptial or written postnuptial agreements signed by the parties.
- For the six (6) months prior to the filing of the action, statements for all credit cards held by either party, whether individually or jointly.
- For the twelve (12) months prior to the filing of the action:
- any credit, loan and/or mortgage applications, or other sworn statement of assets and/or liabilities, prepared by or on behalf of either party.
- documentation related to employee benefits such as but not limited to stock options, retirement, pension, travel, housing, use of company car, mileage reimbursement, profit sharing, bonuses, commissions, membership dues, or any other payments to or on behalf of either party.
- statements for all bank accounts held in the name of either party individually or jointly, or any business owned by either party, or in the name of another person for the benefit of the either party, or held by either party for the benefit of the parties’ minor child(ren).
- statements for all financial assets, including but not limited to all investment accounts, retirement accounts, securities, stocks, bonds, notes or obligations, certificates of deposit owned or held by either party or held by either party for the benefit of the parties’ minor child(ren), 401K statements, individual retirement account (IRA) statements, and pension-plan statements.
- any and all life insurance declaration pages, beneficiary designation forms and the most recent statements of cash, surrender and loan value.
For lists of the mandatory disclosures required in other family-related actions, such as parenting petitions and petitions to change court orders, see https://www.courts.state.nh.us/fdpp/mandatory-disclosure-forms.htm.
Much of the information requested is personal and private in nature. In recognition of the sensitive nature of documents being produced, Rule 1.25-A permits parties to redact all but the last four digits of account numbers and social security numbers before producing documents to protect privacy. Rule 1.25-A also permits parties to seek protective orders requiring the confidential maintenance of documents produced. Such an order is not necessary for financial affidavits, as financial affidavits must be maintained confidentially by the court and parties pursuant to RSA 458:15-b.
It is important to comply with the deadline for production of mandatory disclosures and to produce the documents required. Since the mandatory disclosures are required in each family-related case, the court will not be pleased with or inclined toward arguments against production. The court may impose significant penalties for non-compliance. If documents are unavailable, the producing party should so state and, if desired by the other party, produce signed authorizations allowing that party to obtain the documents from their source. The cost of obtaining such documents may be reallocated by the court at a later date.
While burdensome, production of mandatory disclosures is very helpful in most cases. The exchange of such financial information helps to ensure that each party has an understanding of the scope of the marital estate. In many cases, this enables early settlement negotiations and resolution of family matters.
About the Author: Margaret Kerouac