In a California divorce, people will need to be prepared for the future. A fundamental part of that includes being attentive about the past. Notably, that involves finances. While there might be a perception that a married couple will be aware of the financial circumstances of their spouse and the household in general, that is not always the case.
It is possible that one or both spouses have kept their finances and the detailed information to themselves. This can occur in any marriage. If, for example, a person owned a business and had taken loans out or had accrued more liquid cash than the spouse was aware of, it could be a source for discord in the divorce.
Knowing the law for the full disclosure of assets and liabilities is essential so the court can come to as fair a determination as possible with how to split them. Failure to do so can stoke discord and lead to an extended court case to come to an accurate determination. In some instances, a forensic accounting is needed to do a deep dive into the finances. Since property division can be so problematic, being prepared is essential.
Being upfront about financials is critical for several reasons
Financial disclosure in a divorce is imperative. It means that the sides will show what they spend, earn and owe. Providing documentation to prove they are being truthful will be part of the process.
In some cases, the parties are on reasonably good terms despite their marriage coming to an end. Making sure to be honest about finances can avoid arguments and set the stage for a negotiated settlement. This can keep the hard feelings to a minimum, end the case more rapidly and make sure there is an agreement both sides can accept.
At the outset of the case, there will be preliminary disclosures. The person who files for divorce is known as the petitioner. They must file within 60 days after filing. The spouse is the respondent. They will have 60 days to answer.
It is possible that there will be another financial disclosure. This is the final declaration. Some couples agree to waive the final disclosure if they have an agreement that it is not necessary. They will keep the other person abreast of any financial changes that took place in the interim.
Financial disclosures must include:
- The previous two years’ tax returns
- Proof of any income they earned for the prior two months
- Documentation of what is owned and owed
Other documentation that might be necessary include bank statements; mortgage information; title to ownership of vehicles and other property; credit card statements; passive income; and retirement accounts.
Being protected is essential when seeking a fair divorce settlement
In a divorce, many issues come to the forefront. That includes child custody, child support, parenting time and spousal support. Among the costliest challenges people face is property division. To reach a fair and reasonable resolution, understanding the importance of financial disclosure is a first step.
This goes beyond providing the information when asked to do so. It includes recognizing when the other person might be hiding assets and liabilities. Making sure the disclosure is done according to the law is key. For this important part of the process, it is useful to have professional help that is well-versed in all areas of family law.
