Parties going through a divorce in California have a duty to disclose all of their assets and debts. California has created a form that assists you in disclosing your assets and debts. It is aptly named a “Schedule of Assets and Debts.” You can use this form and then add to it on additional pages.
The duty to disclose your assets and debts exists until the asset or debt has been divided, either through a written agreement or court order. You must list all of your assets and debts, even if you contend that an asset is your separate property and even if you contend that an asset is held by a third party. However, just listing an asset is not good enough. You also need to disclose its value. The case of Marriage of Brewer and Federici (2002) 93 Cal.App.4th 1335, illustrates this point. Ms. Brewer listed her pension plans, but the Court of Appeal stated that she failed to provide accurate and complete valuations of those plans. The California Court of Appeal stated that Ms. Brewer had a duty to provide accurate and complete valuations of her pension plans to her husband, Mr. Federici. This led to the parties’ settlement agreement and judgment being set aside.
Obviously, some assets have so little value that you could bundle them together and estimate a value. For example, all of the kitchen appliances, pots, pans, etc. Normally, these items would be given “garage sale” or “swap meet” value. Likewise, the big screen television that you bought last year is probably now obsolete and not worth anywhere near what you paid for it.
What happens if you fail to disclose? You don’t want to go down that road. In the case of Marriage of Feldman (2000) 153 Cal.App.4th 1470, Mr. Feldman was sanctioned $250,000.00 by the Court for his failure to provide his wife with information regarding his financial dealings during their divorce. He was also ordered to pay her $140,000.00 in attorney fees.
During the divorce process, nearly everyone who is paying child and/or spousal support immediately calls their attorney if they lose their job or their pay is reduced, because they want to make sure the support they are paying is likewise reduced. Attorneys rarely hear from a client when they get a raise or bonus during the divorce process. However, California law requires that you must disclose to the other party immediately upon a significant change in your income. If your spouse discovers that during the divorce process you failed to disclose a significant change in your income you could be sanctioned and also ordered to pay all of your spouse’s attorney fees and costs. What is a significant change in income? Unfortunately, we don’t have any guidance on that yet, so just to be safe…disclose.