If you have recently gone through a divorce, you know how much paperwork was involved. Unfortunately, sometimes in the rapid exchange of all these files, documents, and disclosures, things get missed. An omission typically happens when one or both parties are self-represented, but not always. And while an omission is often inadvertent—an honest mistake—other times one party intentionally hid assets from the other. If you find yourself in such a situation, there are a few things to know.
First, let’s get some legalese out of the way. Do not worry, we will explain what this means in plain English in just a moment. But here is what the California Family Code has to say about omitted assets:
In a proceeding for dissolution of marriage, for nullity of marriage, or for legal separation of the parties, the court has continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding.
In other words, if you are going through a legal separation, annulling a marriage, or getting a divorce, the court has the right to divide and award every bit of community property assets and debts. If the court has not yet weighed in on an asset (bank account, retirement account, real property, etc.) or a debt (mortgage, lien, etc.), then it reserves the right to do so, regardless of what stage of legal separation, annulment, or divorce you are in. This means that if you discover an omitted asset after a divorce is finalized, the court retains jurisdiction and may restore your community property interest.
Now let’s take a look at how the legal system works to ensure you know what assets and debts need to be divided, what options you have if you discover omitted assets after a divorce, and what you should do if you think assets may have been omitted that you have a right to (or discover debts that your former spouse should be responsible for).
Looking for Assets During a Divorce
California Family Code currently tends to emphasize a few key elements. First, it wants parties to a divorce to get their fair share, though this does not always mean an exact 50/50 split. It emphasizes knowledge and transparency over ease and convenience, as anyone who has tried to complete a court form will know. It assigns each spouse responsibility for being truthful about money, assets, and debts (called “fiduciary duty”). And, it does not like to reward individuals who try to cheat the system.
In order to help ensure that parties to a divorce know the details of their own and their spouse’s current economic situation, the Family Code requires parties to complete and exchange what is known as a preliminary declaration of disclosure, or PDD. The PDD may contain up to six other kinds of documents:
- Schedule of Assets and Debts (a form)
- Income and Expense Declaration (a form)
- Two years of tax returns
- A statement about the community’s assets (not a form)
- A statement about the community’s debts (not a form)
- Written disclosure of investment, business, or other income-producing opportunity that emerged since separation but that resulted from investment, business or other income-producing opportunities during the marriage (not a form)
If you do not think your spouse disclosed all their assets or opportunities, you may send discovery requests or file a motion to compel. However, sometimes even these efforts would not turn up omitted assets, especially if your spouse is actively trying to hide them.
Discovering Omitted Assets After a Divorce
A divorce can be finalized without a full picture of assets and debts for a number of reasons. For example, one or both parties to a divorce may:
- Forget about a military pension.
- Forget about a bank account or an old IRA.
- Mischaracterize separate property debt as community (or mischaracterize community property assets as separate).
Identifying, characterizing, and valuing assets and debts can be complicated. Unfortunately, sometimes one party to a divorce goes out of their way to hide assets while a divorce is being finalized in hopes of keeping a bigger share for themselves. If you discover assets that should have been disclosed during a divorce, you have several options.
You can let your former spouse know about the omission and give them an opportunity to rectify the error. If you think the omission was intentional or your ex-spouse will not act in good faith, you may want to ask the court for help instead. The best divorce lawyers will help you understand the paperwork and your potential interest in any omitted asset. They will also advise you on how to make yourself whole, especially if the asset was intentionally omitted.
Deciding On Your Next Steps
Think carefully about whether your former spouse will settle fairly once you alert them to the omitted assets. If you do not think they will honor what you are owed, then consider consulting an attorney. Come prepared to your initial consultation with an attorney by bringing your divorce paperwork and evidence of the omitted assets.
Evidence of the omitted assets is a key factor: The Court prefers to keep divorces finalized and will only revisit jurisdiction when it has a compelling reason to do so. Evidence of an omitted asset is quite compelling in asking the Court to reconsider the distribution of assets in an already finalized divorce.
Fortunately, in California, there is no statute of limitations on how long after a divorce an omitted asset may be found and properly distributed. However, you should still address it as soon as possible. Time can be of the essence for two reasons:
- First, the longer the paper trail, the potentially more expensive to prove your community property interest. You may be awarded attorneys’ fees if your ex-spouse intentionally hid the assets, but there is no guarantee.
- Second, the longer you wait to assert your community property claim, the more time your ex-spouse has to spend (or sell) it. Again, you may be awarded your share of the asset, but if it is already gone, you will have a much harder time recouping the loss.
In the event the asset was hidden intentionally, the Court may award an uneven division (up to 100%) to discourage such behavior. Your counsel will be able to help you determine what a fair division may look like, your options to negotiate with your ex, and how best to ask the Court to intervene, if needed.
At Van Voorhis & Sosna, we know the complexities of identifying, characterizing, and valuing assets and debts because divorce is our sole focus. We offer legal advice and representation in the Bay Area-based on integrity, trust, and understanding. Contact us today, or call 415.274.2530 to schedule a free legal consultation.
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