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Declarations of Disclosure are required in California prior to entry of a Judgment of Dissolution. These are very important documents that must be completed accurately and completely. If not completed accurately or completely the other party in the divorce action may be able to set part or all of the divorce judgment aside. The disclosure requirements also apply to legal separations and domestic partnerships.
California is a community property state. That means that everything acquired during marriage is presumptively community property. Community property includes assets, debts, retirement plans, and pensions. One of the problems many self-represented people come across is fully understanding what assets/debts are community property and what are separate property.
Requirements
Under California law, before a court will grant a divorce each party who has appeared in the case must complete the preliminary financial disclosures. The preliminary financial disclosures include the Income and Expense Declaration (FL-150), the Schedule of Assets and Debts (FL-142), Declaration of Disclosure (FL-140), and Declaration Regarding Service of Disclosures (FL-141).
These forms are important because they allow the parties and, if necessary, the court to identify the community estate. This facilitates settlement negotiations between the parties because it allows them to have a clear picture of the community estate to be divided.
Fiduciary Duty
California law imposes a fiduciary duty between spouses. This means that they must act in the highest good faith and must not take unfair advantage of the other spouse. This duty extends to the disclosures required during divorce proceedings. It includes the duty to disclose all material facts and information regarding the existence, characterization and valuation of all assets in which the community has or may have an interest and debts for which the community is or may be liable. This obligation requires a spouse to provide equal access to all information, records, and books that pertain to the value and character of the assets and debts upon request.
The fiduciary duty is extended under California law from the date of separation until the date that the asset or liability is distributed. From the date of separation the fiduciary duty includes, but is not limited to, the full disclosure of all assets and liabilities, all earnings, accumulations, expenses, and all material facts and information regarding the income and expenses of the spouse.
Failure to Disclose
As mentioned earlier there can be serious consequences for failure to disclose. An example from a real California family law case involves a wife winning the lottery and failing to disclose it. Wife won the California lottery and was awarded upwards of $1 million. She concealed this fact from her husband and filed for divorce about a month later. Throughout the entire divorce wife never mentioned the lottery winnings. After the divorce was finalized husband learned that wife was spending a lot of money, much more than her income would allow. Husband returned to court and after it was revealed that wife never disclosed her lottery winnings. The court awarded the entire lottery winnings to husband.
This is an extreme example but it accurately illustrates the potential consequences of not taking the fiduciary duties seriously during a divorce. The disclosure requirements in a divorce can be complicated and if not completed properly can result in serious consequences. It is important to consult with an attorney that can guide you through this process.