You may or may not be aware that, in California, prior to signing any partial or complete Judgment of Dissolution, each spouse must serve upon the other a set of documents called a Declaration of Disclosure.
A Declaration of Disclosure is comprised of a Schedule of Assets and Debts (a recitation of all of the assets and debts owned in part or whole by both spouses, including a designation of those assets and debts as community, separate, or mixed-character property, and a value for those assets and debts, and documents attached which support these data points), an Income and Expense Declaration (a recitation of your income over the last twelve months and last month from any source, and details of your expenses, whether actual or proposed, and documents which support this data), and a statement submitted under penalty of perjury concerning your assets, debts, and investment opportunities.
The trap that is potentially lurking in your Declaration of Disclosure is the possibility of under-valuing a high-value asset. If you are taking an asset in the overall division of property, it is important that the estimate of value in your disclosure be accurate, or at least conservatively high. The reason for this: if you undervalue an asset that you take in the division of property, it is exceedingly easy in the year after the entry of your Judgment for your spouse to set aside (legally challenge) your stipulated Judgment on the grounds of mistake. The basis for the set-aside boils down to “I never would have agreed to that deal had I known the pension was worth $X.”
This holds true in the first year after the entry of your Judgment even if you spouse could have investigated and discovered the correct value of the asset, but failed to do so (see Marriage of Brewer & Federici (2001) 93 Cal.App.4th 1334, 1345, 113 Cal.Rptr.2d 849, which held that each party had an affirmative duty to find out information for purposes of disclosure independent of the other’s duty to find out information to protect him or herself. It held that the party who was in the “superior position” to obtain the information “must acquire and disclose such information to the other spouse” and that the other party had no legal duty to value the plans himself.”)
A danger of an innocent under-valuation truly arises for those assets whose value is not easily verified-primarily this is real estate, defined benefit plans (plans that pay out a monthly benefit based on, among other things, an estimate of how long you will live), and business interests. A financial account is an easy asset to value-you merely print out the most recent statement. Real property requires more effort-a comparative market analysis or an appraisal. Defined benefit plans require an assessment by an actuarial accountant. A business requires a business evaluation. If you decide to not have valuations done but guess at value, at least guess high-there is no penalty for over-estimating value, just for under-estimating value.
At Divorce Helpline, we have decades of experience in helping our clients understand and comply with their disclosure duties, which in turn allows us to work together to create strong and legally-defensible divorce Judgments.