Divorce is commonly a complex and emotional process involving the determination of child custody, the division of assets, and even alimony and child support. Each spouse must be honest with the other, with their Los Angeles divorce lawyer, and with the court for the process to work as it is designed.
One essential piece of the divorce proceedings is the sharing of financial information which helps determine how assets and debts are divided in the divorce. Preparing financial disclosures in a California divorce requires significant details.
Both spouses are required to share with each other marital assets and debts. It's not an option, rather mandatory.
California family law courts require a mandatory declaration of disclosures must be exchanged between in divorce cases. The primary function of mandatory disclosures is to make the settlement negotiations much easier to review so both spouses will have an accurate understanding of the marital assets and debts.
Both spouses must complete the forms accurately and could be punished by the family law court for incorrect forms. If spouses fail to exchange the mandatory disclosures, the court might have a valid reason to set aside the judgement.
To give readers a better understanding of the discovery and financial disclosures in a divorce, our California divorce attorneys are providing an overview below.
Sharing Financial Information in Divorce Proceedings
Although there are similarities between civil lawsuits and proceedings for marital dissolution, divorces are still a unique civil process.
Since one household is becoming two in a divorce, it is essential that each party receive accurate and honest information from each other and possibly even third parties.
This part of the process is known as discovery, which is a legal process where spouses obtain information from each other, or even a third party. Discovery occurs before a trial and could start within 10 days after your spouse is served the divorce petition.
California divorce laws dictate what information you must share with your soon-to-be ex-spouse, but with the help of an experienced Los Angeles divorce attorney, you could still have a final divorce decree that works in your favor.
Financial Disclosure in Divorce as a Fiduciary Duty
As per California Family Code § 721(b), each spouse has a fiduciary duty to the other. All financial information must be disclosed from the beginning of the divorce process. Family Code § 721(b) states:
In transactions between spouses, they have to follow rules of the good faith and fair dealing on each spouse. This fiduciary relationship is subject to the same duties of nonmarital business partners, including:
(1) Provide each spouse access to any books kept regarding a transaction (2) Rendering true and full information on transactions of community property. (3) Accounting to the spouse any benefit from a transaction by one spouse, without consent, on community property.
Spouses are not to take unfair advantage of each other and that they both have a duty to act in faith and mutual fair dealing. Not all civil lawsuits involve parties that owe fiduciary duties to the other, but divorce is one that always does.
Declarations of Disclosure
The process of sharing financial information with the other party is referred to as Declarations of Disclosure.
Made under oath to the other spouse, these financial disclosures are the way they receive a detailed statement of their financial affairs such as credit card debt, bank accounts the other may not be aware of at the time of the divorce.
Even if such accounts are only in their name or if an inheritance was received by one, they must disclose it to the other spouse.
Included in the disclosure by law are an income and expense declaration and a schedule of assets and debts. Other information that must be exchanged includes:
- Two years of income tax returns
- Statements pertaining to the liabilities, appraisals, and values of any community property
In some lawsuits, these disclosures must be filed with the court, but in a divorce proceeding, each party signs under oath that the schedules have been served upon the other party.
Both spouses are required to exchange financial disclosures and a judge won't grant a judgement for divorce without them. The financial disclosures include the following:
- Declaration of Disclosure (Form FL-140)
- Schedule of Assets and Debts (Form FL-142)
- Income and Expense Declaration (Form FL-150)
- Declaration Regarding Service (Form FL-141)
Once you have received the schedule from your spouse, having a skilled divorce lawyer in Los Angeles study the schedule to look for anything that may be missing and what information that may not have been disclosed is crucial to settlement negotiations and your divorce trial.
Timing of the Declaration of Disclosures
Not only does the law require the honest exchange of this financial information, but it also places deadlines for doing so.
The Preliminary Declarations of Disclosures must be served by the person filing for divorce, known as the petitioner, within 60 days of filing the original petition.
The non-filing party or respondent has 60 days from filing the response to serve their Declaration of Disclosures upon the filing spouse.
In the rare event that the divorce is a true default case, preliminary disclosures can be waived by completing the Stipulation and Waiver of Financial Disclosure (Form FL-144) . However, this is the only circumstance that allows for the waiving of the preliminary disclosures.
A true default case occurs when the respondent does not file a response to the petition, does not appear in the case, and does not sign any kind of marriage settlement agreement.
California Family Code 2105(d) requires spouses to include specific language in the settlement agreement that is filed in court to that acknowledges the mutual consent to waive the final declaration of disclosure.
It is important to note that the Declarations of Disclosure are not just served at the beginning of a divorce but are required at the end as well.
Although, with the assistance and knowledge of a divorce lawyer, sometimes the final disclosures can be waived. Before waiving your right to receive the final Declaration of Disclosures from your spouse, be sure to consult with your attorney
Get Help from a Los Angeles Divorce Lawyer
Ensuring that you provide and receive all legally required information is vital to your success in this process that can impact the rest of your life.
If you are unsure of how the divorce process works, what information you need to disclose to your future ex-spouse, and what information they should be giving you, a Los Angeles divorce lawyer from our firm could help. Complete our online contact form to schedule your consultation or call our law firm.
Furman & Zavatsky
15821 Ventura Blvd #690
Encino, CA 91436
818-528-3471