Preliminary financial disclosures are a necessary step in the California divorce process. Their main purpose is to compel both sides to put all of their financial information on the table, to facilitate settlement of financial issues and to ensure an equal division of community property comprising the marital estate. This article provides an overview of preliminary financial disclosure requirements under California law.
What Needs To Be Disclosed?
California requires spouses to prepare and serve various forms to comply with the parties’ financial disclosure obligations. These forms outline what needs to be disclosed, and include (without limitation) a schedule of assets and debts and an income and expense declaration. A preliminary declaration of disclosure also requires certain attachments. The income and expense declaration requires certain income documents to be attached. The schedule of assets and debts requires certain information regarding assets and debts to be attached including title documents, bank statements, etc. The law also requires the last two years of tax returns to be attached to the disclosures.
The assets and debts or liabilities must be detailed enough so that a person of reasonable and ordinary intelligence can understand it. If a spouse is uncertain about an asset’s value, he or she needs to conduct due diligence to determine its value. The same rules apply to debts and liabilities.
All assets and liabilities need to be disclosed, regardless of whether they’re a community or separate property or obligation. If a spouse is not sure if an asset is community or separate property, he or she is allowed to state the characterization is not yet known and investigation into the characterization is continuing.
When Do I Need To Disclose?
The petitioner must serve the respondent with the declaration of disclosure either with the petition or within 60 days after he or she files the petition. The respondent must serve his or her declaration of disclosure either with the response or within 60 days after he or she files the response. The California Family Code also allows the spouses to agree to extend these times by written agreement or by court order.
Is There A Continuing Duty To Disclose?
The duty of disclosure continues beyond the preliminary exchange of information. Both spouses have a duty to update the disclosures if there are circumstances affecting the assets, debts, or liabilities of the marital estate. This duty of ongoing disclosure continues until the asset is distributed in the course of the dissolution proceeding.
What Are The Consequences For Failing To Disclose?
Parties can face severe consequences for negligent or willful misrepresentations or omissions of assets or debts on the preliminary financial disclosures. They range from monetary sanctions to a partial or complete set aside of the terms impacted by the nondisclosure or incorrect disclosure. Consequently, both parties in the divorce must be completely transparent when preparing the preliminary financial disclosures.
Preparing financial disclosures in a California divorce can present a challenge for those unfamiliar with the process. If you need help preparing financial disclosure forms or other legal documents in a California divorce, please contact Lynx Legal Service at 888-441-2355 or firstname.lastname@example.org. Our experienced professionals are standing by to answer any questions you may have.