Forbes WomanI write for women going through financially complex divorces.
Mention the words “restraining order,” and most people think you’re referring to circumstances involving physical violence, where someone needs a court order to be protected from the dangerous, aggressive actions of someone else.
However, the Automatic Temporary Restraining Orders (called “ATROs,” for short) used in divorce cases are something else entirely.
In fact, rather than referring to something violent, ATROs are often considered legal “niceties.” They help ensure a measure of respect between divorcing spouses and establish specific ground rules, so to speak, regarding a couple’s assets, insurance policies, beneficiary designations (including wills), etc.
Let me explain in more detail by answering a few of the most common questions women ask me about ATROs.
What is an Automatic Temporary Restraining Order?
When a divorce action (or a legal separation, nullity or paternity action) is filed and then served, it may include an ATRO. In general terms, ATROs are mutual court orders that prohibit either spouse from:
- selling, transferring or borrowing against property
- borrowing or selling insurance held for the other spouse
- modifying beneficiaries on policies (health insurance, life insurance, retirement accounts, wills, etc.)
- changing bank accounts
- destroying or hiding assets
In other words, an ATRO prevents either party from changing the financial status quo of the marriage once a divorce action begins.
As Laura A. Wasser, Partner in the family law firm of Wasser, Cooperman and Carter in Los Angeles, CA, points out, that kind of “freeze on assets” can be critical, particularly if one party controls the family finances.
“ATROs are helpful to Family Law attorneys as they establish a broad freeze on assets which might otherwise be under only one party’s control or discretion. They help to level the playing field,” she told me.
“And, in addition to the prophylactic function, ATROs can keep costs down by providing forensic accountants with a snapshot of the financial picture,” Laura added. ‘Too much post-separation movement during the pendency of the action is potentially confusing for accountants and attorneys who are trying to assess the estate.”
Often, these orders are a separate document attached to the Summons of a Petition for Dissolution, but not always. In California ATROs are summarized on the back of the Summons of a Petition for Dissolution. They become immediately effective upon the plaintiff when he or she files the action and upon the defendant upon the service of a summons and remain in effect until the final judgment is signed by the court.
Since an ATRO is “automatic,” will it be automatically included in my divorce petition?
Not always! Despite the word “automatic” in the title, only some states include ATROs in every divorce petition. If you live in a state that does not require ATROs, your attorney will have to request one from the court. (Read more about this below.)
Also, don’t assume all your accounts and policies will “automatically” be notified that an ATRO is in effect. For instance, in states where an ATRO prohibits the modification of beneficiaries, you need to inform your bank, stock brokerage and insurance companies, etc. about the divorce action. The courts do not do this!
What happens if my husband violates the terms of the ATRO?
ATROs are legal documents designed to protect both parties. Violation of the ATRO terms by either spouse can lead to serious legal consequences.
Can terms of the ATRO be altered as the divorce action proceeds?
Yes. I f both spouses agree to the terms, the court can issue a modification(s) of the ATRO.
Are there elements of my financial portfolio not included in an ATRO?
Yes. Again, speaking in general terms, the following are usually notconsidered violations of an ATRO:
- Payment of attorney fees. You are allowed to use your assets to retain legal counsel.
- Spending assets in the “usual course of business.” Of course, the courts will need to make assessments as to the nature of the business and whether or not the dissipation of assets is “usual.”
Attorney Wasser, whose client list includes Maria Shriver, Heidi Klum, Angelina Jolie, Christina Aguilera, Mariah Carey, Britney Spears and many others, has seen the courts exercise broad discretion in this area.
“Also to be considered is the gifting aspect which ATROs may preclude. While paying for an aged parent’s monthly nursing home bills may fall under the usual course of business umbrella, annual gifts to adult children may not,” she said. “Courts have broad discretion in this area. I had one client who was quite perplexed to learn that the ATROs would keep him from paying his girlfriend’s very high credit card bills once the Petition had been filed and served.”
As always, check with your divorce attorney regarding the details of your particular case.
Do ATRO requirements vary from state to state?
Yes. As with many aspects of divorce, different states handle ATROs differently . . . and not all states have them.
“The automatic TRO is not something that is universally implemented across the country and doesn’t apply to New Jersey,” Bari Weinberger, Managing Partner at Weinberger Law Group, a New Jersey law firm exclusively devoted to family law, told me. “In New Jersey, all orders must be done by consent or on notice with an opportunity for both sides to be heard. An exception to this rule exists when there is an Order to Show Cause with temporary restraints. But even in this circumstance, the Court has a hearing before it can become final.”
ATROs aren’t routine in South Carolina, either.
“In South Carolina, ATROS are not automatic, although it has been proposed. Therefore, parties often have to go to the unnecessary expense of filing for an ex parte (emergency) order where there is a fear that a party will be damaged by the actions of another party before a temporary hearing,” Marie-Louise Ramsdale, Owner of the Ramsdale Law Firm in Charleston, SC, said. “For example, I have had to file for an emergency ex parte order requiring a spouse to keep his ill spouse on the health insurance policy when he threatened to remove her.”
Even in New York State, ATROs are relatively new. In 2009, the New York State legislature passed a law that prohibits either spouse from hiding or liquidating assets once a divorce action has commenced. You can see the full extent of these so-called “Automatic Orders” here.
This new law was generally hailed as a benefit to the non-monied spouse (typically, but not always, the woman) because it provides her with a level of certainty and eliminates the time and money required to obtain an injunction from the courts.
“Prior to the institution of the automatic orders in a matrimonial proceedings, the burden would be put on the party who feared that there might be transfer, dissipation or a change in the assets, to apply to the Court to seek a restraint. It was much more costly as a motion had to be made and there was always the lingering concern about whether such steps were necessary in any given matter,” Judith L. Poller, Partner at Pryor Cashman in New York City, explained to me.
“The ATROs now shift the burden to the parties from the beginning of the proceedings to insure that a status quo remains in place. Notwithstanding these new orders, however, it is still necessary to continue to monitor the assets to insure that in fact nothing is changing. Unfortunately people do not always abide by the law and it is often necessary to remind both parties that they are limited in what they can do during the proceedings. There is very little law on the consequences of a violation of the ATROs but the threat of bringing a contempt proceeding does have some teeth.”
At first, all the details and finer points of ATROs may seem a bit perplexing. However, a qualified divorce team will make sure all the different moving parts come together to form a successful strategy.
Your attorney will file the divorce action and the ATRO according to the regulations in your state. Then, once your financial status quo is “frozen,” a Certified Divorce Financial Analyst, like the Divorce Financial Strategists™ here at Bedrock Divorce Advisors™, can analyze your financial situation and together with your attorney chart a course for a successful settlement and a sound, stable financial future.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.For further information, please go to our website at: http://www.BedrockDivorce.com or email Jeff at: Landers@BedrockDivorce.com
Jeffrey A. Landers, CDFA™, is the creator of the Think Financially, Not Emotionally® brand of books, webinars, seminars and eLearning courses designed to educate, empower and support women (and their advisors) before, during and after divorce. His current Amazon best-sellin…