Asset and Income Disclosures

By May 19, 2020 May 26th, 2020 News

After a California dissolution of marriage case is initiated, parties are required to disclose their assets, debts, income, and expenses to each other by completing a Preliminary Declaration of Disclosure. The Declaration of Disclosure incorporates two other forms, a Schedule of Assets and Debts, and an Income and Expense Declaration. Family Code Section 2104 mandates that each spouse must serve his or her disclosures within 60 days of filing the Petition or the Response. The disclosures are not filed with the court, but litigants must file a Declaration Regarding Service of Declaration of Disclosure, which states under penalty of perjury that the statutory disclosures have been made.

The goal of the disclosures is to “(1) to marshal, preserve, and protect community and quasi-community assets and liabilities that exist at the date of separation so as to avoid dissipation of the community estate before distribution, (2) to ensure fair and sufficient child and spousal support awards, and (3) to achieve a division of community and quasi-community assets and liabilities on the dissolution or nullity of marriage or legal separation of the parties as provided under California law.” Family Code Section 2100.

Litigants to an action for dissolution of marriage are required to update their disclosures throughout the duration of the divorce action and must serve a Final Declaration of Disclosure prior to Judgment. Pursuant to Family Code Section 2105, the parties must exchange Final Declarations of Disclosure prior to entering a final agreement for property or support. If the case proceeds to trial, the spouses must exchange Final Declarations of Disclosure at least 45 days prior to the initial trial date.

Final Declaration of Disclosure must include all of the following information:

(1) All material facts and information regarding the characterization of all assets and liabilities.

(2) All material facts and information regarding the valuation of all assets that are contended to be community property or in which it is contended the community has an interest.

(3) All material facts and information regarding the amounts of all obligations that are contended to be community obligations or for which it is contended the community has liability.

(4) All material facts and information regarding the earnings, accumulations, and expenses of each party that have been set forth in the income and expense declaration.

If the parties have fully complied with updating their Preliminary Declarations of Disclosure throughout the case, the parties may agree to waive the Final Declaration of Disclosure.

Failure to fully and accurately disclose all assets and income might result in a Judgment being set aside by the court and/or significant monetary sanctions. (See Family Code Section 2107.)

When parties have complicated marital estates, it might be necessary to employ the assistance of an experienced family law attorney to ensure the disclosures are properly prepared.

by Douglas A. Hatherley, CFLS