Do I Have to Disclose ALL My Assets in a Divorce in Los Angeles?
Yes, you have a duty under California law to disclose all assets, income, property, and debts during a divorce action. The full disclosure of assets is a necessary step in the property division process. Concealing assets or intentionally failing to disclose assets during a divorce in Los Angeles could result in criminal charges and civil penalties.
Why is Disclosure of Assets Required in a California Divorce?
California is a community property state. With very few exceptions, income and property acquired during a marriage or domestic partnership belong to both spouses equally. Therefore, community property is divided in half during a divorce.
Exceptions to community property include inheritances and property owned before the marriage that are maintained as separate property during the marriage. A prenuptial agreement may also result in a different division of property and debts during a divorce.
Full disclosure of assets during a divorce protects community property. Therefore, California Family Code §2100 creates the legal requirement for full disclosure of assets in a divorce case.
Both parties are legally required to disclose all assets in which one or both spouses may own an interest. The disclosure should be made early during the divorce process to allow both parties to review the property disclosures and conduct discovery.
The parties have a continuing obligation to update the asset disclosure if they discover additional assets or find an error within the disclosure.
Penalties for Failing to Disclose Assets During a Divorce
If you fail to disclose your assets to the other party, the court may impose sanctions, including attorney’s fees and any other costs incurred.
If your error was unintentional, you need to amend your asset disclosure immediately. Generally, courts do not punish people for innocently forgetting an asset or making a clerical mistake. However, if you wait too long to amend the disclosure or notify the other party of the mistake, your innocent error could be viewed as an intentional attempt to hide assets.
On the other hand, if you intentionally conceal assets to avoid dividing the property equally, you could face criminal penalties.
You could be charged with perjury under California Penal Code §118. Perjury is making false claims under oath. Depending on the circumstances, a person could be sentenced to up to four years in jail for a perjury conviction. Furthermore, fraud charges could apply, which carry a separate criminal penalty.
In addition to criminal penalties for lying under oath and fraud, California Family Code §1101 imposes civil penalties for concealing assets in a divorce case. A partner can file a civil claim against their spouse seeking damages for the concealment of assets. The court could award the aggrieved spouse a monetary award, court costs, and attorney’s fees.
Working to Uncover Hidden Assets Before and After a Divorce Filing
Do you suspect that your spouse is hiding assets from you during your divorce? If so, report your suspicions to your Los Angeles divorce lawyer immediately. You deserve your fair share of community property, and your lawyer can help.
If you believe that your spouse may try to hide assets when you file for divorce, you can help determine that all assets are disclosed by gathering information regarding your assets before filing for divorce. Documents that you might need include:
Tax returns for as many years as you can gather
Copies of all pay stubs, income statements, 1099s, W-2s, and other evidence of income
List of current and past employers (there could be retirement accounts with these companies)
List of all cash flow and income sources
Brokerage account statements
Copies of estate records for inheritances or gifts
Loan applications and personal financial statements
Copies of insurance policies, including endorsements and addendums
Copies of wills, trusts, and other estate planning documents
Credit card statements
The documents creating corporations, LLCs, partnerships, and other business interests
Appraisals for jewelry, furniture, antiques, etc.
Copies of vehicle registrations and deeds to real estate
Make a list of everything you and your spouse own to discuss with your lawyer. Review canceled checks and credit card statements for odd or unexplained expenses (for example, a post office box or storage unit you did not rent or payments to a leasing or rental company).
You may also want to look for accounts created in the name of a child, parent, or other relatives. Also, check for transfers of investments or other assets to relatives. Pay close attention to assets being sold. A spouse may “sell” the asset to someone on paper, but hide the item in storage.
Being involved in your family’s finances is the best way to prevent a spouse from hiding assets. You should always know what you own and what you owe. Tracking spending is another way to ensure a spouse does not hide assets.