When you or your spouse file for divorce, some of your financial rights and obligations change, while others do not because of the automatic orders rule. The rule temporarily protects both parties’ finances during the divorce process, by requiring the financial status quo to be maintained until these issues can be resolved by agreement or court order. The purpose of the rule is to help ensure that divorcing spouses don’t avoid their financial obligations or allow assets to be diminished in some capacity.
What Financial Matters Are Affected by the Automatic Orders Rule?
The parties are required to maintain the status quo with respect to the following:
- Insurance policies. Insurance premiums must be paid as they were prior to the filing of the divorce action. A spouse also cannot be removed from health, auto, life or other insurance policies.
- Ordinary expenses to maintain marital property. Expenses such as mortgage and loan payments, homeowner’s insurance, utilities, property taxes, HOA fees, necessary repairs and similar costs must continue to be paid.
- Assets. A spouse cannot sell assets, deplete bank accounts or frivolously spend money (also known as wasting assets).
- Debts. Neither party can take on unreasonable debts or encumber marital assets except as part of normal business activities, or to pay usual household expenses or reasonable attorney’s fees related to the divorce.
When Is the Rule Triggered?
The rule goes into effect for the plaintiff when the summons is filed with the court. It applies to the defendant upon service of the summons on the defendant.
Are There Exceptions to the Rule?
There are two important exceptions where the parties do not have to maintain the status quo. The first one is that a spouse can use marital assets to pay reasonable attorney’s fees related to the divorce.
The second one involves drafting or updating a will. Spouses can and should execute a new will while the divorce action is pending. If one spouse dies before the divorce is final, the divorce action ceases, and the assets will be divided as if the divorce was never filed. That means the deceased’s assets that he or she would have wanted to go to the surviving spouse when the marriage was working would end up in his or her hands notwithstanding the divorce action, a result the deceased may not have wanted. A new or revised will can change this outcome with an important exception.
Under New York law, surviving spouses are entitled to one-third of the value of the decedent spouse’s estate unless a prenuptial or post-nuptial agreement provides otherwise. This is known as a spouse’s elective share. The new will cannot eliminate this right but can limit the surviving spouse to only one-third of the estate. Note that if a spouse tries to eliminate the elective share, the surviving spouse can go to the Surrogate’s Court to enforce his or her rights.
When Does the Rule End?
The rule continues to operate until the parties sign a separation agreement settling their financial issues or a court order is issued resolving the matter.
What Happens If Your Spouse Violates the Rule?
The court will enforce the rule as it would any other court order. A party who violates the rule can be held in contempt and imprisoned, although that is unlikely.
If you are considering divorce, it is important to work with an experienced matrimonial attorney to protect your legal rights. Contact us to help you get the best result possible in your divorce.
