Financial transparency is an important part of the California divorce process. Before spouses can properly resolve many of their property and financial issues, each side generally must provide the other with information concerning assets, debts, income, and expenses.

One of the primary steps in this process is the Preliminary Declaration of Disclosure. This is not merely informal financial information exchanged between spouses. California’s disclosure procedures generally require each party in a dissolution or legal separation case to serve a preliminary declaration of disclosure on the other party, subject to limited exceptions.

What Is Included in a Preliminary Declaration of Disclosure?

The disclosure process is intended to provide meaningful information about the parties’ financial circumstances.

The materials used for the preliminary disclosure generally include a Declaration of Disclosure, financial information, and documentation identifying the parties’ assets and liabilities. A Schedule of Assets and Debts may be used to organize property and debt information.

The disclosure process can cover community property, separate property, liabilities, income, and expenses.

Accuracy is important because the information can help determine which financial issues require further investigation before settlement or trial.

Does the Preliminary Disclosure Replace Discovery?

No.

Financial disclosures and formal discovery serve related but different purposes.

The source materials specifically caution against relying entirely on mandatory disclosure requirements instead of conducting appropriate discovery. A preliminary declaration may provide a useful starting point, but it may also reveal questions that require additional investigation.

For example, a disclosed business interest, unusual financial transaction, retirement account, or other asset may lead to requests for supporting documents or other discovery.

The materials even suggest that, except for certain early discovery such as a demand concerning digital assets, it may sometimes be useful to review the preliminary disclosure before developing the broader discovery strategy.

Do Financial Disclosures Have to Be Updated?

Yes.

The disclosure obligation does not necessarily end when the initial paperwork is exchanged. The parties have a continuing duty to update and augment their disclosures when material changes occur.

This can become particularly important in a divorce that remains pending for a significant period.

Account balances may change. Assets may be sold. Debts may be paid or incurred. Employment circumstances and income can change.

Financial disclosure should therefore be viewed as an ongoing responsibility rather than a one-time snapshot that can simply be forgotten after the beginning of the case.

Complete Disclosure Helps the Parties Make Informed Decisions

A settlement can be difficult to evaluate when one spouse does not have an accurate picture of the marital finances.

Preliminary declarations of disclosure provide an organized starting point for identifying property, liabilities, and financial circumstances. They can also help reveal where additional discovery may be necessary.

Preparing these disclosures carefully and reviewing the other spouse’s disclosures closely can help identify financial questions before the parties enter into a settlement or proceed toward trial.