California divorces require that each party must prepare financial disclosures, meaning that they identify and share information regarding any assets or liabilities. This disclosure of financial information can be a complex process that calls for great detail, so there are several important elements to be knowledgeable of regarding financial disclosures. Here’s what you need to know about financial disclosures in California divorces.
What is a Financial Disclosure?
The State of California requires parties of divorce, legal separation, and nullity cases to provide information to each other about their assets, liabilities, and any debts if applicable, as stated in Family Code 2103. These disclosures are intended to make settlement negotiations more transparent and efficient between the parties, with a focus on the marital estate’s assets and liabilities. It is pertinent that financial disclosure forms are filled out correctly, and failure to do so may result in court action. Parties that fail to exchange these mandatory disclosures also risk having their judgment set aside altogether by the court.
Related: How to Protect Your Assets in a California Divorce
Preliminary Financial Disclosures
In order to receive judgment, preliminary financial disclosures must be exchanged between the petitioner and respondent. The main purpose of these disclosures is to aid the court and parties in accurately identifying their assets and debts. First, the petitioner will serve the respondent with the summons of petition before serving their preliminary declaration of disclosure. A declaration from the respondent will then be exchanged to follow.
There are four essential documents that encompass the preliminary financial disclosure process:
- Declaration of Disclosure FL-140
- Schedule of Assets and Debts FL-142
- Income and Expense Declaration FL-150
- Declaration Regarding Service of Declaration of Disclosure FL-141
In completing these forms, both parties are legally obligated to disclose all assets and debts under penalty of perjury under California law. This ensures that all information has been properly disclosed between the parties and the court and that any financial opportunities presented to the marital community will be disclosed as well.
It is also important to note that in the event that the respondent fails to file a response to the petition, or both parties agree in writing to waive the financial disclosure, then these same forms must be updated as part of exchanging the final disclosure.
Related: Dividing Investments and Pensions in a California Divorce
Final Disclosures
Before finalizing a divorce between two parties, they both must exchange a final disclosure. A final declaration of disclosure is similar to a preliminary declaration of disclosure and involves the same forms, as noted above, though there are some additional disclosures that are required for a final declaration. As detailed in Family Code 2105, the final declaration of disclosure must include information such as all material facts and information regarding the amounts of obligations, the consequences of failing to exchange a final declaration of disclosure, and a waiver signed by both parties that they have complied with Section 2104.
Do I Have to Disclose All of My Finances During Divorce?
In short, yes, California courts require full financial disclosure of all income, assets, and expenses. Regarding what is included in the declaration of disclosures exchanged or served to each spouse, this will require a detailed catalog of information such as:
- All debts
- Separate liabilities
- Any inheritances received
- Real and Personal property appraisals
- Value of all community property
- All joint accounts
- And, the value of separate assets
FAQs About Financial Disclosures in California Divorces
Will the petitioner always be responsible for serving their preliminary disclosures on the respondent?
Yes. This will always be true, unless the respondent has not appeared in the case, then there is no marital settlement agreement and thus the petitioner is eligible to waive the respondent’s preliminary disclosure. This is classified as a true default case, where the respondent makes no appearance in the case, does not file a response to the petition, and does not sign a marital settlement agreement.
How are parties able to waive final disclosures?
The parties can agree to waive final disclosure by either completing the Stipulation and Waiver of Final Disclosure (Form FL-144) or their county’s local form of this waiver.
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