When Does the Duty to Disclose Financial Information End in a California Divorce?

Parties to a dissolution of marriage are bound by law to disclose all material facts relating to income or expenses of a party from the date of separation until the date of a valid, enforceable, and binding resolution of all issues relating to child or spousal support.

Family Code, Section 2102 (c)

The Legal Foundation: What is Family Code Section 2102?

Family Code Section 2102 establishes a fiduciary duty between divorcing spouses, requiring full disclosure of all material facts related to income, expenses, assets, and debts. This duty serves a crucial purpose:

• To ensure fairness in determining child support, spousal support, and property division.
• To prevent fraud, concealment of assets, and inequitable settlements.

Why Does California Emphasize Full Disclosure in Divorce?

California, as a community property state, strongly protects the principle of transparency and fairness in family law. Disclosure duties are:

• Designed to prevent financial manipulation.
• Essential for protecting the best interests of the child.
• A way to enforce accountability between divorcing parties.

This legal requirement aligns with California’s broader family law goals: safeguarding the welfare of children, ensuring fair division of marital property, and upholding the integrity of the legal process.

Case Spotlight: The Sorge Case and Its Impact on Disclosure Duties

In a recent case, the California Court of Appeal for the Fourth District had to determine when the duty to disclose ends.

The Sorge Case: A Timeline

• 1983: Joseph and Maryanne Sorge married.
• 2000: They separated.
• 2003: Entered into a Marital Settlement Agreement (MSA), formalized as a judgment of dissolution in Wyoming.
• 2005: The judgment was registered in San Diego.
• 2007: Maryanne sought to modify custody and child support.
• Between the MSA and the modification request, Joseph sold a business and netted about $100 million.

Maryanne alleged Joseph:

• Failed to disclose income changes starting in 2006.
• Did not disclose material income changes during modification proceedings.
• Used an LLC to make child support payments, potentially obscuring the true source of funds.

The Legal Dispute

The trial court found that Joseph’s duty to disclose continued post-judgment and sanctioned him $75,000.

However, the Court of Appeal reversed, clarifying that:

• The duty to disclose ends when a valid, enforceable, and binding resolution is reached, the final judgment.
• After judgment, parties must rely on formal requests for updated financial information, such as the income and expense declaration (FL-150 form), typically filed every 12 months.

Legal Principles Clarified by the Sorge Case

Defining “Valid, Enforceable, and Binding Resolution”

• Final judgment in a divorce case marks the end of the automatic duty to disclose.
• Temporary orders do not count, they are modifiable and interim.
• After judgment, disclosure obligations shift to a request-driven model: parties must ask for updated information when seeking modifications.

Understanding Post-Judgment Financial Updates

• California Family Code Section 3651 allows for child support modifications upon a material change in circumstances.
• The 12-month financial update rule lets parties request income and expense declarations post-judgment.
• This system balances fairness with efficiency; endless disclosure is not required, but mechanisms exist to obtain updated information.

Broader Context: Understanding Disclosure Obligations in Divorce

Related Legal Principles

• Fiduciary Duties in Divorce: Spouses owe each other a duty of full disclosure, loyalty, and good faith.
• Contempt of Court: A party who deliberately hides information post-judgment may face contempt proceedings.
• Child Support Enforcement Mechanisms: Wage garnishment, bank levies, and contempt sanctions are available to enforce compliance.
• Role of Forensic Accountants: In high-asset or complex cases, forensic experts help trace hidden assets, evaluate business interests, and uncover undisclosed income.
• Comparative State Laws: Disclosure duties and enforcement mechanisms vary by state. For instance:
  • In New York, post-judgment financial updates may not be required unless a modification request is filed.
  • In Texas, a material change must be shown, but there is no equivalent of California’s 12-month financial update provision.

Actionable Tips for Family Law Clients

• Always disclose fully until the final judgment. Transparency builds trust and prevents legal penalties.
• After judgment, be proactive:
  • File an RFO if you need updated information.
  • Request an income and expense declaration (FL-150 form) every 12 months.
• Consult a family law attorney, especially in high-net-worth cases or if you suspect hidden income.
• Consider a forensic accountant when complex financial structures (like LLCs or trusts) are involved.

Frequently Asked Questions (FAQs)

When does the duty to disclose end after divorce?

The duty to disclose ends when there is a final judgment resolving child and spousal support. After that, parties must rely on formal legal procedures to request updates.

What happens if I discover hidden income after the judgment?

If you uncover hidden income, you can:

• File an RFO to modify support.
• Pursue contempt of court or sanctions if nondisclosure was intentional.

Can a party be sanctioned for not updating income post-judgment?

Not automatically. After the final judgment, there is no proactive disclosure duty. However, a party can be sanctioned for failing to comply with discovery requests during modification proceedings.

How do I get updated financial information after a divorce?

File a Request for Order and serve a formal request for an income and expense declaration under California Family Code Section 3664.

What is the role of a forensic accountant in divorce cases?

Forensic accountants help uncover hidden assets, evaluate business income, and provide expert analysis in complex financial disputes.

Ready to Protect Your Financial Interests? Get Expert Legal Help Today!

Navigating disclosure duties and post-judgment modifications can be complex, especially in high-asset divorces or cases involving trusts and businesses. Don’t risk sanctions, delays, or unfair outcomes.

Visit DivorceDigest today to connect with trusted family law attorneys who can guide you through disclosure requirements, modification procedures, and enforcement strategies.