SB1117.DOC

SECTION 1. The legislature finds that excessive and harmful property dissipation occurs during divorce cases, which ultimately hurts any children involved. Failure to disclose the existence of property or the wasting of assets leads to needless litigation and excessive use of scarce court resources. Applying the commercial partnership model and fraudulent transfer principles, with additional definitions, procedures, and tools, will assist the family court in managing difficult cases. In addition, the legislature finds that changing the valuation date for property division purposes to the date of the dissolution of the marital partnership will provide consistency and fairness while encouraging efficient, timely, and accurate resolution of property division issues.

The purpose of this Act is to provide effective procedures for property division pursuant to a divorce while simplifying and codifying existing law to ensure consistency, lower barriers to justice, and to assist practitioners and pro se litigants with family court divorce cases.

SECTION 2. Chapter 580, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§580- Definitions. For the purposes of this chapter:

"Date of the dissolution of the marital partnership" means the earliest of the following dates:

(1) The date of the final separation in contemplation of divorce;

(2) The date of the filing of the complaint for divorce;

(3) The date one or both of the parties took a substantial step toward a final separation that subsequently occurred;

(4) The date one or both of the parties contemplated or took a substantial step toward the filing of the complaint for divorce that was subsequently filed; or

(5) The date one or both of the parties demonstrated their express will to withdraw from the marital partnership.

"Dissipation" means the concealment or failure to disclose, or the transferring, encumbering, wasting, or otherwise disposing of any of property, whether real, personal, or mixed, over and above current income, except as necessary for the ordinary course of a business or for usual current living expenses.

"Marital estate" means anything of present or prospective value of the parties.

"Marital partnership property" means all property that is not marital separate property.

"Marital separate property" means the following property owned by one or both of the spouses at the time of the divorce, including:

(1) All property that was excluded from the marital partnership by an agreement in conformity with the Uniform Premarital Agreement Act, chapter 572D;

(2) All property that was excluded from the marital partnership by a valid contract; and

(3) All property that:

(A) Was acquired by the spouse-owner during the marriage by gift or inheritance;

(B) Was expressly classified by a donee, heir, spouse, or owner as that person's separate property; and

(C) After acquisition, was maintained by itself or by sources other than one or both of the spouses and funded by sources other than marital partnership income or property.

"Property" means anything that may be the subject of ownership.

"Transfer" means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes a payment of money, a release, a lease, and the creation of a lien or encumbrance.

§580- Marital partnership and property division. (a) The value of the property for division pursuant to section 580-47 shall be set as of the date of the dissolution of the marital partnership. The date of dissolution shall mark the commencement of the marital partnership winding up period, which shall terminate when the court finally issues a final order regarding:

(1) Dissolution of the marriage;

(2) Child custody, visitation, and support;

(3) Spousal support; and

(4) Division and distribution of property and debts.

(b) During the marital partnership winding up period, each party owes the marital partnership the fiduciary duty of loyalty and the duty of care as follows:

(1) The duty of loyalty includes the following:

(A) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the party of partnership property, including the appropriation of a partnership opportunity;

(B) To refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and

(C) To refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership; and

(2) The duty of care to the partnership and the other party in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

(c) A party shall discharge the duties to the marital partnership and the other party under this part and exercise any rights consistent with the obligation of good faith and fair dealing.

(d) A party does not violate a duty or obligation under this part or under the partnership agreement merely because the party's conduct furthers the party's own interest.

(e) A reduction of the dollar value of the marital estate chargeable to a divorcing party occurs when, during the marital partnership winding up period, a party's action or inaction causes a reduction of the dollar value of the marital estate under such circumstances that the party equitably should be charged with having received the dollar value of the reduction. If a divorcing party chargeably reduced the dollar value of the marital estate, the court shall add the dollar amount of that chargeable reduction to the dollar value of the marital estate and treat that dollar amount as having been awarded to the divorcing party who caused that chargeable reduction.

(f) During the dissolution and winding up of the marital partnership, both spouses shall be both debtor and creditor to each other, for the purposes of chapter 651C, and shall be subject to that chapter, except for section 651C-9. In case of a conflict between this chapter and chapter 651C, this chapter shall prevail."

SECTION 3. Section 580-10, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) When a complaint for annulment, divorce, or separation, is filed in this State, [~~the court,~~] on an application by either party, supported by affidavit or a statement made under penalty of perjury, the court, without a hearing, [~~may enjoin~~] shall:

(1) Order each of the parties to that action to timely provide to the other party full financial and property disclosure on forms provided by the court; and

(2) Enjoin and restrain each of the parties to that action from transferring, encumbering, wasting, or otherwise disposing of any of their property, whether real, personal, or mixed, over and above current income, except as necessary for the ordinary course of a business or for usual current living expenses, without the consent and concurrence of the other party to such action for divorce, or further specific order of the court. Where [~~such~~] restraining orders are issued against the other party to the action, [~~such~~] the person restrained shall be served promptly with the order and shall be entitled to a prompt hearing to show cause why [~~such~~] the order should not be enforced."

SECTION 4. Section 580-47, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Upon granting a divorce, or thereafter if, in addition to the powers granted in subsections (c) and (d), jurisdiction of those matters is reserved under the decree by agreement of both parties or by order of court after finding that good cause exists, the court may make any further orders as shall appear just and equitable (1) compelling the parties or either of them to provide for the support, maintenance, and education of the children of the parties; (2) compelling either party to provide for the support and maintenance of the other party; (3) finally dividing and distributing the estate of the parties, real, personal, or mixed, whether community, joint, or separate; and (4) allocating, as between the parties, the responsibility for the payment of the debts of the parties whether community, joint, or separate, and the attorney's fees, costs, and expenses incurred by each party by reason of the divorce. In making these further orders, the court shall take into consideration: the respective merits of the parties, the relative abilities of the parties, the condition in which each party will be left by the divorce, the burdens imposed upon either party for the benefit of the children of the parties, the dissipation, if any, of marital property by either party, each party's fiduciary duty of loyalty and the duty of care to the winding up of the marital partnership, and all other circumstances of the case. In establishing the amounts of child support, the court shall use the guidelines established under section 576D-7. Provision may be made for the support, maintenance, and education of an adult or minor child and for the support, maintenance, and education of an incompetent adult child whether or not the petition is made before or after the child has attained the age of majority. In those cases where child support payments are to continue due to the adult child's pursuance of education, the agency, three months prior to the adult child's nineteenth birthday, shall send notice by regular mail to the adult child and the custodial parent that prospective child support will be suspended unless proof is provided by the custodial parent or adult child to the child support enforcement agency, prior to the child's nineteenth birthday, that the child is presently enrolled as a full-time student in school or has been accepted into and plans to attend as a full-time student for the next semester a post-high school university, college, or vocational school. If the custodial parent or adult child fails to do so, prospective child support payments may be automatically suspended by the child support enforcement agency, hearings officer, or court upon the child reaching the age of nineteen years. In addition, if applicable, the agency, hearings officer, or court may issue an order terminating existing assignments against the responsible parent's income and income assignment orders.

In addition to any other relevant factors considered, the court, in ordering spousal support and maintenance, shall consider the following factors:

(1) Financial resources of the parties;

(2) Ability of the party seeking support and maintenance to meet his or her needs independently;

(3) Duration of the marriage;

(4) Standard of living established during the marriage;

(5) Age of the parties;

(6) Physical and emotional condition of the parties;

(7) Usual occupation of the parties during the marriage;

(8) Vocational skills and employability of the party seeking support and maintenance;

(9) Needs of the parties;

(10) Custodial and child support responsibilities;

(11) Ability of the party from whom support and maintenance is sought to meet his or her own needs while meeting the needs of the party seeking support and maintenance;

(12) Other factors which measure the financial condition in which the parties will be left as the result of the action under which the determination of maintenance is made; and

(13) Probable duration of the need of the party seeking support and maintenance.

The court may order support and maintenance to a party for an indefinite period or until further order of the court; provided that in the event the court determines that support and maintenance shall be ordered for a specific duration wholly or partly based on competent evidence as to the amount of time which will be required for the party seeking support and maintenance to secure adequate training, education, skills, or other qualifications necessary to qualify for appropriate employment, whether intended to qualify the party for a new occupation, update or expand existing qualification, or otherwise enable or enhance the employability of the party, the court shall order support and maintenance for a period sufficient to allow completion of the training, education, skills, or other activity, and shall allow, in addition, sufficient time for the party to secure appropriate employment."

2. By amending subsection (f) to read:

"(f) Attorney's fees and costs. The court hearing any motion for orders either revising an order for the custody, support, maintenance, and education of the children of the parties, or an order for the support and maintenance of one party by the other, or a motion for an order to enforce any such order or any order made under subsection (a) of this section, may make such orders requiring either party to pay or contribute to the payment of the attorney's fees, costs, and expenses of the other party relating to such motion and hearing as shall appear just and equitable after consideration of the respective merits of the parties, the relative abilities of the parties, the economic condition of each party at the time of the hearing, the burdens imposed upon either party for the benefit of the children of the parties, the dissipation, if any, of marital property by either party, each party's fiduciary duty of loyalty and the duty of care to the winding up of the marital partnership, and all other circumstances of the case."

SECTION 5. Section 580-56, Hawaii Revised Statutes, is amended to read as follows:

"§580-56 Property rights following dissolution of marriage. (a) Every decree of divorce which does not specifically recite that the final division of the property of the parties is reserved for further hearing, decision, and orders shall finally divide the property of the parties to such action.

(b) Following the entry of a decree of divorce in any matrimonial action in which the final division of the property of the parties to such action is reserved for further hearings, decisions, and orders, notwithstanding the provisions of section 560:2-802, or any other provisions of the law to the contrary, each party to such action shall continue to have all of the rights to and interests in the property of the other party to such action as provided by chapter 533 and chapter 560, or as otherwise provided by law to the same extent he or she would have had such rights or interests if the decree of divorce had not been entered, until the entry of a decree or order finally dividing the property of the parties to such matrimonial action, or as provided in subsection (d) of this section.

(c) When a party to a matrimonial action has remarried following the entry of a decree of divorce, in which the final division of the property of the parties is reserved for further hearings, decisions, and orders, but prior to the entry of a decree or order finally dividing the property owned by the parties to that action, notwithstanding the provisions of chapter 533 and chapter 560, the spouse of such remarried party shall have none of the rights or interests in the former spouse's real property or personal estate as provided in chapter 533 and chapter 560, or as otherwise provided by law, until such time as a decree or order finally dividing the property owned by the parties or either of them as of the effective date of the entry of the decree of divorce dissolving his or her prior marriage shall be entered. Upon the entry of a decree or order finally dividing the property of the parties to a matrimonial action in which a decree of divorce has been entered, the spouse of a party to such action who has remarried shall have all of the rights of a spouse as provided by chapter 533 and chapter 560, or as otherwise provided by law, in and to the property of the former spouse vested in such spouse by such decree or order finally dividing the property of the parties or either of them, as of the effective date of the entry of the decree of dissolution of the prior marriage.

[(d) Following the entry of a decree of divorce, or the entry of a decree or order finally dividing the property of the parties to a matrimonial action if the same is reserved in the decree of divorce, or the elapse of one year after entry of a decree or order reserving the final division of property of the party, a divorced spouse shall not be entitled to dower or curtesy in the former spouse's real estate, or any part thereof, nor to any share of the former spouse's personal estate.]"

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1117
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII