Financial Disclosures: Property, Assets, and Debts
The law in California requires every couple getting a divorce to provide each other with information about their financial status. While this might seem annoying and unnecessary because, well, you each probably already know what the other has… but it’s one of those details that the law makes us all do; so we’ll help you get this squared away.
What sort of information about your financial status do you need to share? Well, it includes information about your employment, income, living expenses, and all assets and debts. We’ll get into the income and expense disclosures in a separate article, but let’s talk a little about property here.
What’s considered “property”?
You might notice a lot of references to “property” in your court forms. We think that this is totally confusing, so let us try to clarify it for you: the court doesn’t consider the term “property” to only mean real property, (like a home or land), rather, the court considers it to be everything you have – both assets and debts.
What are assets?
“Assets” is a term to describe everything you own: bank accounts, stocks, retirement accounts, houses, land, cars, furniture, appliances, even money that’s owed to you (like a personal loan or a tax refund that hasn’t been paid yet).
What are debts?
“Debts” is a term to describe everything you owe to anyone: credit card debts, student loans, tax debt, lines of credit, loans, etc.
What if we have an agreement already?
Even if you and your STBX have kept your finances entirely separate, or you’ve already divided your finances, or you each just want to walk away with what’s in your respective names… the law still requires you to give your STBX this information as well as documentation (usually bank statements). This falls under the category of something that doesn’t really apply in many people’s cases, but the law makes you do it anyway – they’re fickle like that.
Why does the court need this information?
You might be upset to hear this next part… but the odd thing about all of this is that the court itself doesn’t actually need this information – they just need you to promise that you gave it to your spouse. So, you just need to swear to the court that you gave the information to your STBX… that’s it! This way, information about your assets and debts is not filed with the court, so the judge won’t see it and it won’t be a part of public record.
The reason the court acquires you to share this information is to make sure everyone is informed before making an agreement. In other words, you can’t agree to divide things unless you know what everything is that is to be divided. Once your divorce is final, your duty (and your STBX) to give each other this information is usually over. Divorce agreements are a legally binding contract with significant effects. Look at it this way – you wouldn’t want to buy a house without doing an inspection, right?