New Law Changes the Disclosure of Financial Information in Divorce (Again)

Some time after divorce is filed and served on the other spouse, each party needs to send certain financial disclosures to the other spouse.  This process ensures fairness and helps prevent spouses from hiding assets during the divorce (although the process is far from perfect).  However, there is currently no real timeline on making these disclosures–which in turn forces attorneys to file demands for the production of documents and motions to compel this information.  There used to be a timeline for what is called the “preliminary declaration disclosure” (see FL-140) and now it seems a timeline is coming back.

Recently the California State Assembly thought this was something pressing they needed to address (yes, I am being facetious) and they passed AB 1406, which changes three separate Family Code Sections, including Section 2104.  Under the new law, which I assume will come into effect in January of 2013, there are two big changes.  First, the preliminary declaration of disclosure will need to include the two most recent tax returns.  Second, the preliminary declaration of disclosure must be completed within 60 days of filing and 60 days of response.

Personally, I find it flawed to make the deadline relative to the filing date and not the date of service.  There may be some instances when it is difficult to serve the other party and PDD deadlines will approach before or right after service.  In addition, many spouses do not have their tax returns, because the other spouse has control of them.  These spouses will need to file an IRS 4506 form to request a copy of their taxes–so that they can comply with the PDD requirements.

The new requirements will bring some clarity to what seemed to be an ambiguous part of the process.  It may also reduce the judicial resources spent on motion to compel discovery in family law cases.  However, I think just as many judicial resources will be spent on motions brought under Section 2107 requesting sanctions for the other party’s inadvertent failure to comply with the new deadline requirement.    The new section’s ultimate impact will probably be minimal.

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