Preliminary financial disclosures are a required step in the California divorce process. Without the preliminary financial disclosures, the judge will not grant the divorce. Parties can face severe consequences for negligent or willful omissions of assets or debts on the preliminary financial disclosures. So both parties in the divorce must be completely transparent when preparing the preliminary financial disclosures, including all marital and separate assets and debts.
California is a Community Property State –
What Does That Mean? With very few exceptions, any property acquired during a marriage is legally considered community property, including liabilities, assets, and pensions. If someone wants to get a California divorce, the court requires that any issues created during the marriage reach resolution during the divorce. For example, the division of all assets and debts, and resolving custody, spousal support, and child support issues. The preliminary financial disclosures enable the court to address all the crucial points. The preliminary financial disclosures include the Income & Expense Declaration (FL-150) and the Schedule of Assets and Debts (FL-142).
What’s So Important About the Preliminary Financial Disclosures? These two documents combined clearly identify all the separate property and community property (both income and debts). The disclosures help both parties, and when necessary, the court, to determine the community estate. When individuals involved fill out the preliminary financial disclosures without the assistance of an experienced attorney, they often misunderstand the definition of community property. Approaching the documentation without an accurate definition usually means inaccuracies on the forms or incorrectly filled out forms.
What Consequences Can Occur Due to Inaccurate Preliminary Financial Disclosures? Mistakes on the preliminary financial disclosures can result in financial consequences. Misunderstanding what constitutes community property can result in not receiving funds you are due. For instance, many are unaware spouses are entitled to 50% of deposits made to a 401(k) during a marriage. If a person intentionally refuses to list assets or debts on the disclosures, an innocent party could lose out on their share of a community asset. In some cases, parties face consequences due to failure to include separate property on the forms. Many assume including separate property is not necessary. They think the court does not have the power to divide separate property assets during a divorce. This is true, but in many cases, parties misunderstand the legal characterization of assets. For instance, many assume that any property listed in one party’s name alone is their separate property regardless of when it was acquired. Examples of property often mistakenly considered separate property include: a house bought during a marriage that is in one party’s name alone, a 401(k) created before a wedding but built with deposits made during the marriage, a bank account in one party’s name opened during the marriage, etc. In some cases, failure to accurately disclose assets and debts as required can result in court punishment. I f you need help handling the financial disclosures required for a California divorce or if you need to file for divorce, please get in touch with one of the experienced family law attorneys at The Maggio Law Firm today.