Failure to Disclose Assets in Divorce Cases

A recent appellate case stemming from Ventura County again highlights that failure to disclose information in a marital dissolution case generally does not work out well for the party who chooses not to disclose. Significant developments have been occurring in this area of disclosure. The disclosure requirements in a dissolution action primarily stem from several sections of the Family Code.

Family Code, Section 721, states in pertinent part that: a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. Section (b) allows each party access to records “at all times” for inspection and copying. Further, upon request, parties must disclose “true and full information of all things affecting any transaction which concerns the community….”

Preliminary and Final Disclosures Under Family Code §2100

Under Family Code, Section 2100, spouses are obligated to give full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest, regardless of whether it is separate or community property.

The disclosure process involves:

• Preliminary Disclosure: Early in the case, each party must complete and serve documents, including the Declaration of Disclosure (FL-140), Schedule of Assets and Debts (FL-142), and Income & Expense Declaration (FL-150). These must be served within 60 days of filing the petition or response.
• Final Disclosure: Before trial or settlement, updated disclosures are required, unless the parties mutually waive this obligation in writing, strictly complying with Family Code § 2105(d). The Declaration re Service of Disclosure (FL-141) must be filed to confirm service.

These requirements apply to both community and separate property. Even assets that one spouse believes belong solely to them must be disclosed to allow the court and the other party to evaluate fairness.

Expanded Statutory Framework (§§2103–2107, 2120–2122)

California Family Code provides additional enforcement tools for nondisclosure:

• §2103–2107: Authorize sanctions, penalties, and fee orders against parties who fail to meet disclosure obligations. Courts may also limit testimony or impose adverse evidentiary presumptions.
• §2120–2122: Allow courts to set aside judgments if a party proves that nondisclosure of material assets or debts occurred. This means even a divorce finalized years earlier can be reopened if hidden assets are later discovered.

These provisions reinforce the seriousness of fiduciary duty and disclosure obligations in divorce cases.

Case Example: Marriage of Hofer (Ventura County)

You get the idea? Disclosure is crucial. In the case of Ventura, the Marriage of Hofer, the Husband found out that disclosure is crucial as well. Husband had an ownership interest in several family businesses. The parties were married in 1991, had two children, and filed for divorce in 2009.

Through the dissolution process, the wife tried several ways to get the Husband to disclose information about his assets and income. The husband had various reasons for not disclosing this information, but the court sanctioned him for failing to provide the requested information, amounting to approximately $30,000.

The wife still had approximately $160,000 in fees due and owing, and the Husband paid his attorney around $300,000 in fees. The wife sought a fee order against the Husband for $200,000, which was granted. Of course, Husband appealed, claiming the court did not have the necessary information from which to base such a fee award.

The appellate court dismissed the appeal based on a theory called “disentitlement,” stating that Husband chose not to disclose evidence of his financial circumstances despite three separate discovery orders and sanctions. This choice “disentitles” Husband to a choice accorded most litigants, the choice to appeal.

Thus, we again see the importance of disclosing information in a marital dissolution action and another consequence of failing to do so.

Other Important California Cases on Nondisclosure

While Hofer illustrates the use of the disentitlement doctrine, other California cases have established equally significant consequences:

• Marriage of Rossi (2001): A wife won the lottery but failed to disclose her winnings during the divorce. The court awarded 100% of the lottery proceeds to her husband as a penalty.
• Marriage of Feldman (2007): The husband was ordered to pay nearly $390,000 in sanctions and fees for nondisclosure of investment accounts. This case is frequently cited as a warning against concealment.
• Marriage of Brewer & Federici (2001): Reinforced that attorney’s fees and sanctions may be imposed for nondisclosure, even if the concealment is not willful but negligent.

These precedents demonstrate that California courts consistently punish nondisclosure harshly, whether through fee orders, asset forfeiture, or sanctions.

Consequences of Failing to Disclose Assets in Divorce

California courts take nondisclosure very seriously. Consequences may include:

• Court-ordered sanctions and attorneys’ fees.
• Transfer or forfeiture of assets to the innocent spouse.
• Inability to appeal due to disentitlement.
• Contempt proceedings for failure to comply with discovery orders.
• Set-aside of the divorce judgment, even years later.

The longer the concealment continues, the harsher the outcome tends to be. Courts are especially severe in cases involving hidden businesses, offshore accounts, or intentional misrepresentation.

Conditional and Temporal Scenarios in Disclosure

Disclosure requirements apply in multiple contexts and timeframes:

• Post-Judgment Discovery: If an undisclosed asset is discovered years after divorce, §2122 allows reopening the case.
• Willful vs. Negligent Nondisclosure: Courts may distinguish between deliberate concealment (treated harshly) and negligent mistakes (still sanctionable, but often less severe).
• Support and Business Ownership Cases: Disclosure has a direct impact on spousal support, business valuations, and child support orders. Failure to provide accurate income data may result in modified support or adverse inferences being made against the nondisclosing spouse.

Why Full Disclosure Protects Both Parties

Disclosure is not just a statutory duty — it ensures fairness and credibility. By being transparent:

• Spouses secure an equitable division of property.
• The risk of post-divorce litigation is minimized.
• The court views both parties as acting in good faith.
• Long-term costs, sanctions, and delays are reduced.

Hiring forensic accountants and legal counsel can help ensure full and accurate disclosures, especially in cases involving complex business interests or high-value assets.

Practical Steps for Divorce Disclosures

To comply with California law and avoid penalties, divorcing spouses should:

• Gather financial records early, including tax returns, bank statements, and business documents.
• Complete all required disclosure forms truthfully.
• Serve disclosures on time and file FL-141 to prove service.
• Update disclosures if financial circumstances change.
• Seek professional guidance from attorneys and forensic accountants when needed.

FAQs on Divorce Disclosure in California

What happens if I forget to list an asset during the divorce process?

If it was an honest mistake, the court may allow correction; however, sanctions or fee awards can still be applied. If the omission was deliberate, the court may award the asset entirely to your spouse.

Can I waive my final disclosure?

Yes, under Family Code §2105(d), but only if both parties sign a waiver and the court finds it appropriate. Otherwise, a final disclosure is required.

What is the timeline for disclosure in a California divorce?

Preliminary disclosures must be served within 60 days of filing or responding to the divorce petition. Final disclosures are due before trial or settlement unless waived.

Can a divorce judgment be reopened if assets were hidden?

Yes. Under Family Code §§2120–2122, judgments can be set aside for fraud, mistake, or failure to disclose. This can happen even years after a divorce.

Do I need a lawyer to help with divorce disclosures?

While you can complete disclosures yourself, errors or omissions carry serious risks. An experienced family law attorney ensures compliance, accuracy, and protection of your rights.

Get Legal Help With Divorce Disclosures in Ventura County

If you are facing divorce in Ventura County or anywhere in California, it is essential to ensure that you meet the disclosure requirements to avoid costly mistakes. The attorneys at Reape Rickett understand how California courts enforce fiduciary duties and disclosure laws.

Our team has decades of experience representing clients in high-asset divorces, business ownership disputes, and cases involving complex financial disclosures. We provide guidance through every step of the disclosure process, from preliminary filings to trial preparation.

Contact Reape Rickett today to schedule a confidential consultation and receive trusted legal advice tailored to your circumstances.