I'll Show You Mine if You Show Me Yours: Financial Disclosures

Why File Disclosures? Many of my clients are reluctant about sharing their financial information with their soon to be former spouse.   I often encounter resistance from clients when it is time to prepare the required disclosure forms.  Here are some samples of questions that I have been asked.

We agree that each of us gets to keep everything in our own name, why do I need to list everything?

There are many cases where a couple keeps their finances separate during a marriage or where they have come to an agreement as to who gets what property in a dissolution. Although the parties have an agreement as to how the accounts should be divided, all the accounts must be disclosed to the other party.  The reasoning behind this is that a person cannot waive rights to any assets that they are not aware of.

I have been setting aside money for myself so that I can start a new life, do I really need to show my ex that?

All community property accounts which are in existence as of the date of separation must be divided equally between the parties; therefore you must disclose all accounts. While it is acceptable to have accounts in your own name during a marriage and prior to the filing of a dissolution, the courts require that all community assets be divided at the time of dissolution.

What is the worst thing that can happen if I refuse to disclose something?

If you conceal assets from your spouse in a divorce proceeding, a judge may decide to award the other party all of the concealed assets. There is a court case in California called In re Marriage of Rossi, 90 Cal.App.4th 34 (Cal.App. 2nd Dist. 2001) where the wife won the lottery and then decided to file for dissolution.  She did not disclose the lottery winnings in the divorce case and when it was discovered, the court awarded 100% of the winnings to the husband.  If the wife had disclosed the winnings, the husband would have only received his 50% community property interest.

What about my separate property – do I need to disclose that?

You must disclose all property.  If you have property which would be considered separate property, property which was acquired before the marriage, after separation or through a gift or inheritance, you may indicate that the asset is your separate property.  You will likely be required to provide evidence to the courts that the asset solely belongs to you.

While it may not be appealing to share all of your financial information with your ex spouse, it is much better than having everything you own being taken away from you. California is a community property state, which means that all assets acquired during the marriage are the property of both parties. The courts do their best to make sure each party has their fair share. Don't make the mistake of trying to hide your assets. When asked for a disclosure, it is always best to file one.