Divorce can be a complex and emotionally taxing process, especially when it comes to financial matters. In California, part of this process involves completing a Declaration of Disclosure to ensure each spouse understands the state of the other’s finances. Disclosures can be complex documents, and they must be written carefully to ensure that they cover all subjects required under California law.
Below is a guide for divorcing couples in California to recognize the essentials of financial disclosures, including their obligations and rights. Understanding this part of the divorce process is crucial, and consulting an experienced divorce attorney is highly recommended to ensure accuracy and compliance.
What Is a Declaration of Disclosure During Divorce?
The Declaration of Disclosure is a set of legal documents that each party in the divorce must complete and exchange. It requires a complete and honest disclosure of all financial information. This includes details about all assets, debts, income, and expenses.
The purpose of the disclosures is to ensure transparency and fairness in the division of property and financial responsibilities. It is a required part of the divorce process, as it allows both parties and the court to understand the complete financial situation, facilitating equitable decisions regarding asset division, child support, and alimony.
Fiduciary Duty to Disclose Financial Information
Central to this process is the concept of fiduciary duty. In the context of marital dissolutions, fiduciary duty requires both spouses to act honestly and in good faith towards each other when it comes to financial matters. This duty includes:
- Complete Transparency: Each spouse must fully disclose all assets and liabilities.
- Honesty and Fairness: Spouses must act honestly and fairly in all financial dealings and transactions related to the divorce.
- Avoiding Self-Interest: Spouses must not take any unfair advantage of the other in financial matters.
Failing to uphold this fiduciary duty can lead to legal consequences, including monetary penalties (e.g., sanctions) and/or an unfavorable division of assets in the proceedings.
When Are Declarations of Disclosure Necessary?
Declarations of Disclosure are not a one-time task but a multi-stage process in the divorce proceedings. Initially, a Preliminary Declaration of Disclosure is required at the start of the divorce. This initial declaration is crucial, as it sets the stage for negotiations and decisions regarding asset division and spousal support.
As the divorce process progresses, a Final Declaration of Disclosure may also be required. This serves to confirm and update the information provided earlier, ensuring that all financial information is current and accurate at the time of the final divorce settlement or trial.
What Should the Financial Declaration Include?
A comprehensive and detailed financial declaration is essential for a fair and equitable settlement. The Declaration of Disclosure should include, but is not limited to:
- All Assets: This includes real estate, bank accounts, investments, business interests, and personal property. It’s important to disclose all assets, regardless of whether the assets are held jointly with your spouse, in your name individually, or in your name with third parties.
- All Debts and Liabilities: Similar to assets, this includes both jointly and individually held debts, such as mortgages, car loans, credit card debts, and personal loans.
- Income Sources: Full disclosure of all sources of income is required, including salaries, business income, rental income, dividends, and any other form of earnings.
- Expenses: A detailed list of monthly expenses helps in determining spousal and child support obligations.
- Tax Returns and Financial Statements: Recent tax returns and financial statements can provide a comprehensive view of the marital financial situation.
Ensuring that this declaration is complete and accurate is crucial. Omissions or inaccuracies can lead to legal complications and may adversely affect the outcome of the divorce.
Prepare for Your Divorce With Skilled Legal Counsel
Navigating through the complexities of financial disclosures during a divorce can be challenging. It’s essential to understand each spouse’s rights and obligations to ensure a fair and equitable process. Remember, the accuracy and completeness of the financial disclosure can significantly impact the outcome of the divorce proceedings. Consulting with an experienced divorce attorney is strongly advised to guide couples through this process and ensure that the financial declaration is accurate. In matters of divorce, especially those involving finances, thorough and professional guidance are key to a smooth and fair resolution. At Flicker, Kerin, Kruger & Bissada, LLP, we specialize in providing exceptional legal counsel to every client. Schedule a consultation today to discuss the demands of petitioning for dissolution and discover how we can assist with your Declaration of Disclosure and all aspects of your divorce.