The initial financial disclosures in a divorce

Preliminary Declaration of Disclosure

California's Preliminary Declaration of Disclosure Law and Procedure

One of the most important parts of any divorce case is the service of the preliminary declaration of disclosure. There are very limited circumstances in which a spouse can avoid serving such a preliminary declaration of disclosure. The general rule is one must be served in a divorce case. Once the divorce petition is filed, the petitioner must serve the respondent with the declaration of disclosure either with the petition or within 60 days after he or she files the petition. There is a rare exception to this timeline if there is service by publication or posting by court order but we won't go there because that is such a unique circumstance.

And what about the respondent? The respondent must serve his or her declaration of disclosure either with the response or within 60 days after he or she files the response.

These deadlines are important but the California Family Code also allows the spouses to agree to extend these times by written agreement or by court order.

The preliminary declaration of disclosure is a series of forms including but not limited to an income and expense declaration and a schedule of assets and debts. The preliminary declaration of disclosure also requires certain attachments. The income and expense declaration requires certain income documents attached. The schedule of assets and debts requires certain information regarding assets and debts attached including title documents, bank statements, etc. The law also requires the last two years of tax returns attached to the disclosures.

Everything in the preliminary declaration of disclosure must be signed and dated under penalty of perjury. Committing perjury by providing false information or even unintentionally providing incomplete or incorrect information can have significant consequences on a divorce settlement and judgment later on, including a partial or full set aside of the terms impacted by the nondisclosure or incorrect disclosure.

Sometimes spouses become confused about what they must disclose even though the instructions on the disclosure forms are clear. It does not matter if the asset or debt is community or separate property. It does not matter who has possession of it. It must be disclosed.

In addition, the law mandates that the assets and debts or liabilities must be set forth with sufficient particularity such that a person of reasonable and ordinary intelligence can understand it. And if a spouse is unsure about an asset's value, he or she needs to do the due diligence to determine its value.

It is common in a preliminary declaration of disclosure to place the value of an asset that has not yet been valued or appraised as “unknown.” But the spouse better take action if he or she is going to do that to become informed regarding its value.

The preliminary declaration of disclosure also requires the spouse to state whether he or she believes the asset is community or separate property. Sometimes an asset may be a combination of the two and in such a situation the spouse who signs the disclosures should state if the asset is community property but there is also a separate property interest in it. The reverse is also true.

There are also situations when an asset may not be 100% community or separate property of the spouses. This is common with businesses where a spouse may be a business partner or a partial shareholder but does not own the entire business. In such a circumstance, the schedule of assets and debts should state what percentage the spouse owns.

Mistakes on a preliminary declaration of disclosure are not fatal so long as they are corrected within a reasonable time. So, for example, if a spouse incorrectly categorized asset, debt or liability, he or she can amend his or her preliminary declaration of disclosure at a later date and before judgment.

The spouses also have an obligation to file a proof of service with the court that confirms they serve the disclosure. A family law judge is not supposed to sign a judgment until these proofs of service are filed with the court.

Just because the spouses completed a preliminary declaration of disclosure does not mean the duty of disclosure is complete. Even before there is a final declaration of disclosure, both spouses have a duty to update the disclosures if there are circumstances that affect the assets, debts or liabilities. These can include a change in value or investment opportunities, just to name a couple of examples. This duty of ongoing disclosure continues from the date the spouses separate to the date the asset is distributed.

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