It is a mandatory requirement that in a divorce action, the spouses have a fiduciary duty to disclose to one another all assets of the community. The California legislature has declared by statute that " a full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties, regardless of the characterization as community or separate, together with a disclosure of all income and expenses of the parties." The legislature then extends this duty by stating that "Each party has a continuing duty to immediately, fully, and accurately update and augment that disclosure to the extent there has been any material changes so that at the time the parties enter into an agreement for resolution of any of these issues, ...each party will have a full and complete knowledge of the relevant underlying facts."
The purpose of these disclosure rules are three fold:
1. They help to protect assets and liabilities that exist at the date of separation so as to avoid their dissipation prior to distribution.
2. They help to ensure fair and sufficient child and spousal support awards.
3. They assist to achieve a division of assets and liabilities between the parties as required under California law.
The California legislature has reinforced the importance of these disclosure requirements that it has added law which states the confidential relationship of a husband and wife imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.
And what happens when there is not full disclosure. The court has the power to have the judgment of dissolution set aside and to impose sanctions of the party at fault which could be as harsh as ordering forfeiture of the asset not disclosed.
For additional information please contact Rand E. Pinsky, Esq., of the Law Offices of Rand E. Pinsky at 661-295-4644.