ATROS: Automatic Temporary Restraining Orders

Every divorce matter in California subject both parties to Family Code 2040 which requires the summons to contain temporary restraining orders (ATROS). The restraining order applies to both minor children and their removal from the state as well as both real and personal property.

Often, parties are unaware of ATROS and carry on with investments, property, and expenditures without consulting the other party. ATROS becomes effective as to the Plaintiff ( the person who filed the Complaint for Divorce) immediately upon the filing of the Complaint and applies to the Defendant once the Defendant has notice of the divorce matter through the service of a Summons and copy of the Complaint.  It continues to apply to both parties throughout the course of the litigation and until the court issues a Judgment of Divorce.

This blog focuses on the property component. The restraining order covers community, quasi-community, or separate property, disallowing “transferring, encumbering, hypothecating, concealing or in any way disposing of…without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life.”

An exception to the automatic restraining orders contained in the California Dissolution Summons regarding the prohibition from invading accounts allows parties to do so to generate the monies to hire their attorneys. Payment of reasonable attorney’s fees and costs in connection with the action is exempted.

The addition to preventing the sale, transfer and disposition of assets, it also prohibits taking on any debts that would burden the other party’s credit. This includes the use of joint credit cards outside of normal spending and accessing a home equity line of credit or second mortgage. It also includes the initiation of a loan from a 401(k) fund, deferral of income that would have typically been received and other attempts to reduce income, devalue assets or incur debt that may become community debt.

It also disallows the changing of beneficiary designations on any life insurance policy, pension or retirement plan or account. Furthermore, neither party may remove a party or child from coverage under an existing medical, dental, automobile or disability insurance policy. All insurance coverage must remain in full force and effect while the divorce is pending, the same as it existed at the time the divorce complaint was filed.

If ATROS is not followed, the party could be held in contempt of court and subsequent further restrictions on the use of assets. There may be sanctions imposed on having to bring the matter before the court and awarded to the other party for reimbursement of attorney fees pertaining to any violation. 

Parties may not claim lack of awareness regarding ATROS since the restrictions are printed on the forms accompanying the Summons whether the party read them or not. While there may be a contempt of court order, ATROS violations may also evolve into a breach of fiduciary duty to the other party. But typically, the breach would need to constitute oppression, fraud, or malice. Family Code section 1101 (h) only allows the award of 100% of a community asset to one party when there is clear and convincing evidence of fraud, malice or oppression.

Actions which are not considered violations of ATROS:

·      Payment of attorney fees to pay reasonable attorney’s fees and costs in order to retain counsel

·      Creating, modifying or revoking a will or power of attorney (either general durable or healthcare)

·      Severing a joint tenancy or eliminating a right of survivorship to property during the pendency of a dissolution if the notice of the change is filed and served on the other in advance of the change

 Since reimbursements are not only time consuming and often involve the use of a CDFA® professional or forensic accountants, it is imperative to respect the ATROS to reduce attorney and professional fees throughout the divorce. This becomes especially critical in the initial stage of the process when the parties are trying to re-establish how to manage finances and emotions are running high.

 Also, often the divorce process can continue for an extended time period spanning multiple years. It is important to put into place safeguards and other procedures for maintaining equal access to the community property. An often-used approach it to fund a joint account equally for ongoing community expenses if temporary support is not being paid during the pendency of divorce. Another mitigation may be early distribution of assets equally for each spouse.

If there is a pension or brokerage account involved, an important and immediate device that is deployed is notice to the Plan Administrator or brokerage firm legal department pursuant to Family Code section 755(b). Essentially this written demand tells them that you are claiming an adverse interest in the assets and its legal effect is to put the Plan or brokerage for any payments that they make after receiving notice. The Plan or brokerage will not be able to release any funds if the notice is properly drafted and served either by certified mail (receipt requested) or through a process server.

Every case is different, but similar segregations that are equal to both parties may be achieved.

It is important to act fairly and not abuse power or be manipulative during the divorce process.

 ATROS on the SUMMONS:
Automatic Temporary Restraining Orders (ATROS) prevent both parties from any of the following without the written consent of the other party:

1.    Removing the minor child or children of the parties from the state (if living in the state) without the prior written consent of the other party or an order of the court

2.    Transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life

·      Neither party may take out a loan on community property

·      Neither can pledge property as security or collateral for a debt

·      Neither may close a joint checking account and transfer the money into their own separate account

·      Neither may remove items from a safe deposit box or cash from a safe and give it to a third party to hold

3.    Cashing, borrowing against, canceling, transferring, disposing of or changing the beneficiaries of any insurance or other coverage, including life, health, automobile and disability, held for the benefit of the parties and their children

·      Neither may cash in a life insurance policy

·      Neither may change the beneficiary on any insurance policies

·      The spouse or children may not be removed from current health, dental or vision insurance policies

·      Neither may remove the other or children from the existing automobile insurance policy even if not living together

4.    Parties are prohibited from taking on any  debts that would burden the other party’s credit including joint credit cards outside of normal spending and accessing a home equity line of credit or second mortgage. 

In addition, each party must notify the other of any proposed extraordinary expenditures at least 5 business days prior to incurring those expenses and must account to the court for all extraordinary expenditures made after the restraining order.

This article does NOT constitute legal advice and is for general information purposes ONLY. Prior to making any decisions, seek legal counsel from a licensed attorney.