Financial Disclosure in Divorce

  • Jun 27 2019

During the pendency of a divorce in California, each divorcing party is required to exchange full and complete financial information with the other.

Family Code Section 2100 requires full disclosure of all assets and debts, income and expenses to the opposing party, from the date of filing of the Petition until the Judgment of Dissolution is entered. The requirement is intended to provide each party with full transparency of all financial matters that may affect their position in settlement or trial, and to assure fairness in the process. The courts take this obligation very seriously.

Failure to adhere to the requirement of transparency can have serious adverse consequences to the party who has failed to disclose, including payment of attorney’s fees and other costly sanctions, including setting aside of the Judgment. In the case of fraud in the disclosures, punitive damages may be awarded to the other party. In one famous case, a wife who failed to disclose her lottery winnings to her husband was required by the court to turn over her entire winnings – over a million dollars – to her former husband. The courts have held that attempts to circumvent disclosures are sanctionable even if the other party was not harmed. Therefore, diligence requires strict attention to preparation of financial disclosures.

The Declaration of Disclosure is not filed with the Court, but it is signed under penalty of perjury, and is one of the most important documents involved in any Dissolution of Marriage in California.

  1. Preliminary Declaration of Disclosure

The Preliminary Declaration of Disclosure is required to be exchanged between the parties within 60 days of the filing of the Petition for Dissolution of Marriage and Response. The Preliminary Declaration of Disclosure typically includes two attached forms, the Schedule of Assets and Debts and the Income and Expense Declaration.

  1. Schedule of Assets and Debts

This form requires all assets and debts to be listed, whether in the name of the disclosing party, their spouse’s name, or both names, whether the assets were acquired before or during marriage, whether or not they are in the party’s possession or in the possession of a third party, and in some cases, even when the party believes the asset has no value. The most recent back-up documentation must be attached, including deeds, titles, and account statements, for example. Diligence in preparation of this document is essential.

  1. Income and Expense Declaration

As one might guess, this form requires disclosure of all the party’s income and expenses. For a business owner, this requires disclosure of a separate schedule showing the income and expenses of the business. When a business is involved, a forensic accountant may be necessary to assist to adequately prepare the Income and Expense Declaration. This document, as are the other disclosure documents, is signed under penalty of perjury and must be complete and accurate.

  1. Final Declaration of Disclosure

Prior to settlement or trial, the parties are required to serve on each other a Final Declaration of Disclosure. The Final Declaration requires that the parties disclose to each other all material facts and information regarding characterization and valuation of assets and debts and the facts and information contained in the Income and Expense Declaration. Certain investment opportunities must also be disclosed.

Exchange of the Final Declaration may be waived under certain circumstances. Your attorney may advise against such waiver. Even if the Final Declaration is waived, the Preliminary Declaration must be fully updated.

  1. Conclusion

This brief summary provides an introduction to the disclosure process but is not intended to cover all the details of each spouse’s obligations. Your attorney will answer any questions you may have and guide you through the disclosure process to help you protect your interests.

Divorce is stressful for all parties. If you are in need of a family law attorney, contact a compassionate and experienced attorney at Schneiders & Associates.

By: Claudia Silverman, Family Law Specialist, Certified by the State Bar of California Board of Legal Specialization

Posted in: Uncategorized


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