Dividing assets, debts, and liabilities between divorcing spouses is one of the most important and contentious steps in the divorce process. In order to determine who gets what property, spouses must complete and exchange preliminary financial disclosures with each other. In layman’s terms, preliminary financial disclosures are detailed financial records that require each spouse to list their property and assets for the purposes of determining how a couple’s estate will be distributed. But why is this information important? To understand the importance of financial disclosures, one must first have a basic understanding of California divorce law.
Community vs. Separate Property
California is a community property state, meaning that in most cases, everything a couple acquires during the duration of their marriage is considered joint property between the two spouses. This includes assets, debts, liabilities, and pensions. Separate property, on the other hand, includes any property owned by a person before marriage or acquired after marriage by gift or inheritance. By correctly completing preliminary financial disclosures, both the courts and the couple can more easily distinguish between community and separate property, ensuring that both parties receive a fair share of the community property.
What Happens if Financial Disclosures are Inaccurate?
It is imperative divorcing spouses complete their financial disclosures with the assistance of a skilled attorney to ensure they are accurate and compliant with all applicable laws. Submitting an incorrect financial disclosure can not only lead to an unfair distribution of assets, but it could also expose the offending spouse to possible criminal prosecution.
For example, say a wife is looking to divorce her husband and decides to fill out her financial disclosures without legal assistance to save the costs of hiring an attorney. During the process, she sees that her spouse’s 401(k) is in his name and therefore assumes it to be his separate property. She continues to list the jewelry she inherited from her deceased relative as a community asset, since there is no title to it and was acquired during the marriage. She has just made a crucial mistake! In reality, her husband has no entitlement to her grandmother’s jewelry and she has a right to half of all deposits made to the 401(k) during the course of the marriage. Without an attorney’s guidance, the wife would have inadvertently forfeited a large portion of her entitled assets.
Intentionally submitting false information on a financial disclosure can be equally damaging. For example, let’s assume a man were to purchase a winning lottery ticket worth $10 million a week before filing for divorce from his wife. He decides to hide this lottery ticket and intentionally omit it from his financial disclosures in an attempt to keep the winnings all to himself. The divorce continues as planned and is finalized, with his wife never finding out about his winnings.
Shortly afterwards, his wife finds out about the lottery winnings when she sees social media posts of him taking lavish vacations and purchasing luxury cars – all of which are well beyond the limits of his income. The wife now has a right to ask the divorce court to reevaluate their divorce arrangement with this new income in mind and punish the husband for his dishonesty. As a result, the husband loses all of his winnings to his wife and is charged with perjury – an offense punishable by up to four years in a state penitentiary.
Knowledgeable Divorce Representation in Riverside County
If you and your spouse have decided to pursue a divorce, it is imperative you retain the services of a skilled divorce attorney to ensure you do not fall victim to these types of costly mistakes. At Hanson, Gorian, Bradford & Hanich, our compassionate Riverside County divorce lawyers have more than 50 years of combined experience and can help you get through even the most complex divorce with ease.
To find out more about how our firm can help, call (951) 687-6003 or contact us online today.