By Wallace Francis

This is Part 2 of a four-part series on how a divorce moves through the California courts. Part 1 covered the petition and the response. This part covers financial disclosures. Part 3 covers motions and temporary orders, and Part 4 covers the final judgment.

Once a divorce case is filed, both spouses must share complete information about their finances. This is not optional, and it is not something the court will overlook. California law treats disclosure as one of the most important parts of the whole case. Any agreement or judgment about money and property depends on both sides knowing what there is to divide.

Why Disclosure Matters

Under California law, spouses owe each other a duty of the highest good faith and fair dealing when it comes to their shared property. This is called a fiduciary duty. It does not end when the couple separates. It continues until the property has actually been divided. Part of that duty is being open and honest about all income, assets, and debts, including things that only one spouse has been managing.

The Preliminary Declaration of Disclosure

Each spouse must prepare and serve a Preliminary Declaration of Disclosure. The Petitioner must serve it at the time the Petition is filed or within 60 days after. The Respondent must serve it at the time the Response is filed or within 60 days after. The spouses cannot agree to skip this step.

The package usually includes the following.

  • A Declaration of Disclosure cover form (form FL-140).
  • A Schedule of Assets and Debts (form FL-142) or a Property Declaration (form FL-160), listing everything owned and owed, whether it is community property or separate property.
  • An Income and Expense Declaration (form FL-150).
  • Copies of all tax returns filed in the past two years.
  • A written statement of all important facts about the value and character of the property and debts, and about any investment or business opportunity that came up during the marriage.

These papers are served on the other spouse. They are not filed with the court. Instead, each spouse files a short form called a Declaration Regarding Service of Declaration of Disclosure (form FL-141), which tells the court that the disclosures were served.

The Income and Expense Declaration

The Income and Expense Declaration deserves special attention. It shows your income from every source, your deductions, your monthly expenses, and some basic information about your assets. You attach your recent pay stubs. Judges rely on this form when they decide child support, spousal support, and requests for attorney fees.

Courts expect this form to be current. As a general rule, an Income and Expense Declaration should have been completed within the past three months and should still reflect your actual situation. If your job, pay, or expenses change, a new one is needed. An old or inaccurate form can hurt your credibility and can lead to a hearing being delayed.

The Final Declaration of Disclosure

Before the case is settled or goes to trial, each spouse is also supposed to serve a Final Declaration of Disclosure. This updates the earlier disclosure and confirms the current values and facts. Unlike the preliminary disclosure, the spouses may agree in writing to waive the final disclosure (form FL-144). Even when the final disclosure is waived, both spouses still have a duty to share new information as it comes up. If something important changes while the case is going on, such as a new job, a bonus, or the sale of property, the other side must be told.

What Happens When Someone Hides Something

The consequences for failing to disclose can be serious. A court can order money sanctions against the spouse who failed to disclose. A court can also set aside a judgment that was based on incomplete or false information. In cases involving fraud, oppression, or malice, the court can award the entire value of a hidden asset to the other spouse. Hiding an asset is a gamble that often costs the person far more than the asset was worth.

Discovery

Sometimes the disclosures are incomplete, or one spouse has reason to believe the other is not telling the full story. In that case, the law allows a set of formal tools called discovery. Common discovery tools include the following.

  • Form Interrogatories, which are standard written questions (form FL-145) that must be answered under oath.
  • Requests for Production, which ask the other side to hand over specific documents such as bank statements or business records.
  • Requests for Admission, which ask the other side to admit or deny specific facts.
  • Depositions, where a person answers questions under oath in front of a court reporter.
  • Subpoenas, which can get records directly from banks, employers, and other third parties.

Discovery has strict deadlines. Written responses are usually due 30 days after the requests are served, with a few extra days added depending on how they were served. A spouse who misses the deadline can lose the right to object to the questions. If answers are incomplete, the two sides are expected to talk and try to work it out before asking the court to step in with a motion to compel.

Practical Tips

Start gathering documents early. Helpful records often include the following.

  • Tax returns and W-2 or 1099 forms.
  • Recent pay stubs.
  • Bank, credit card, and investment statements.
  • Retirement account statements.
  • Mortgage statements and property tax bills.
  • Loan documents and vehicle titles.
  • Business records, if either spouse owns a business.

Be careful and accurate. These forms are signed under penalty of perjury. If you do not know the value of something, it is better to say that and explain why than to guess. A complete and honest disclosure tends to make settlement easier and builds trust with the court.

What Comes Next

Disclosure takes time, and while it is happening, the family still has to function. Someone has to decide where the children will live and how the bills will be paid. When spouses cannot agree on these things, they can ask the court for temporary orders. Part 3 of this series explains how that works.

The Full Series

This article provides general information about California divorce law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case is different, and the rules and local court practices can change. If you are facing a divorce, speak with a family law attorney about your own situation.