The Duty to Provide Complete and Accurate Financial Disclosure in a California Divorce
Couples that are going through the divorce process in California should understand that the Family Code and the Family Courts requires that they provide complete and accurate disclosure to the other spouse. The financial disclosures are taken seriously by the Courts and failure to disclose could have serious consequences for the non-disclosing party in a divorce case. The parties are required to prepare and exchange preliminary declaration of disclosure which includes and fl-142 schedule of assets and debts, fl-150 income and expense declaration, 2 years tax return, a statement of all material facts and information regarding the valuation of all assets that are community property or in which the community has an interest, a statement of all material facts and information regarding obligations for which the community is liable, and an accurate and complete written disclosure of any investment opportunity, business opportunity, or other income-producing opportunity presented since the date of separation that results from any investment, significant business, or other income-producing opportunity from the date of marriage to the date of separation. If the case does not settle and proceeds to trial, the parties would have to exchange final declaration of disclosure which consists of the above information with the characterization of the assets and debts whether community or separate and the valuation of those items.
Family Code Section 2100 states that "[a] full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties." This disclosure must be made regardless of the characterization of the assets and liabilities as community or separate property.
Family Code Section 1100 defines disclosure as "the act of providing information to the other party or to the court." Disclosure can be made in a variety of ways, including through the exchange of financial documents, such as tax returns and bank statements, or through written declarations.
Family Code Section 721 states that "[e]ach party to a proceeding for dissolution of marriage or legal separation has a duty to make full and accurate disclosure of all financial information and material facts." This duty includes disclosing information about all assets and liabilities, as well as information about income and expenses.
The duty of disclosure is important for several reasons. First, it allows each spouse to have a full understanding of the marital estate before they enter into negotiations, settlement, or go to trial. This helps to ensure that the division of property and debts is fair and equitable.
Second, the duty of disclosure helps to reduce the likelihood of fraud and concealment of assets. If a spouse fails to disclose all of their assets or liabilities, the other spouse may be able to set aside the divorce judgment.
Finally, the duty of disclosure helps to promote the public policy of California, which favors the speedy and efficient resolution of divorce cases.
If a spouse fails to comply with their duty of disclosure, they may face a number of penalties. The court may order the spouse to pay the other spouse's attorney's fees and costs. The court may also order the spouse to disclose the hidden assets or liabilities and award the non-disclosed asset to the other spouse. In some cases, the court may even set aside the divorce judgment.
The best way to comply with the duty of disclosure is to be honest and forthright with your spouse and with the court. Gather all of your financial documents and review them carefully. If you have any questions about what to disclose, consult with an experienced divorce attorney.
Here are some specific tips for complying with the duty of disclosure:
- Disclose all assets and liabilities, regardless of the characterization as community or separate property.
- Disclose all income and expenses, including income from employment, investments, and businesses.
- Disclose all debts, including credit card debt, student loans, and mortgages.
- Disclose all gifts and inheritances received during the marriage.
- Disclose all business interests, including partnerships, corporations, and limited liability companies.
- Disclose all information about any income-producing opportunities that arose after the date of separation but that resulted from any investment made during the marriage.
If your divorce entails significant assets such as a business interests, real estate holdings, retirement plans, inheritance, it is important to seek the guidance of an experienced family law attorney to help you navigate through your case.
Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does create any attorney client relationship between you and the Law Offices of Kenneth U. Reyes, APC This article is not a solicitation.
Attorney Kenneth Ursua Reyes is a Certified Family Law Specialist with extensive trial experience. He was President of the Philippine American Bar Association. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. He is a graduate of Southwestern University Law School in Los Angeles and California State University, San Bernardino School of Business Administration. He was a former CPA prior to law practice. He is Managing Partner of the LAW OFFICES OF KENNETH REYES, APC and Managing Partner of REYES CAPITAL MANAGEMENT LLC. located at 3699 Wilshire Blvd., Suite 747, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail kenneth@kenreyeslaw.com or visit our website at Kenreyeslaw.com