Divorcing parties in California sometimes have a habit of playing fast and loose with the facts and not properly disclosing information regarding their incomes, expenses, assets and debts to their spouses. Consider this a big warning shot across the bow.
The recent trend by the California courts to be more critical of whether divorcing parties have fully complied with their disclosure obligations makes one principle perfectly clear: when in doubt, disclose. While it is frequently done in other areas of law, the California family courts will not tolerate individuals who try to “hide the eight ball” during dissolution proceedings. And this is true for cases that settle as well as cases that go to trial. A party cannot knowingly and intelligently settle a case when s/he is not fully informed of the facts. Neither can the court render a proper trial decision when the Judge is not fully informed of the facts.
In re Marriage of Feldman, a 2007 appellate case, has suddenly brought the issue of disclosure to the forefront in California divorce proceedings. Mr. Feldman, a successful businessman, failed to disclose to his Wife a number of substantial financial transactions, along with his formation of multiple new companies, despite her repeated requests for the information. The trial court was deeply troubled by Mr. Feldman’s lack of candor, and ordered him to pay his Wife $140,000 in attorney fees and $250,000 in sanctions for his failure to disclose the facts.
The Feldman court made it clear that the penalties for failure to disclose can be severe and immediate. The other party does not need to show that s/he has been harmed, nor does s/he have to wait for trial to ask the court to penalize the non-disclosing party.
California Family Code §§2100-2113 define each party’s disclosure obligation as a mandatory, affirmative and ongoing duty. In layman’s terms, this means that each party must voluntarily provide full, accurate and updated information regarding his/her complete financial condition. A party must disclose everyasset and every debt, along with complete details regarding his/her income from all sources and monthly expenses. And, each party must voluntarilyupdate that information anytime there is a material change.
While it may be tempting to consider hiding important financial information from your spouse, the potential consequences for failure to disclose are much more severe than the benefits. It simply is not worth the risk. Remember — when in doubt, disclose.
For more information about disclosure obligations or other California family law issues, please contact attorney Gary D. Sparks.