Under California family law, spouses owe each other a fiduciary duty until the divorce is over and final. This means a spouse owes the other spouse a duty of the highest good faith and fair dealing. Fiduciary duties will include the duty to account for assets and debt; hold any community property as a trust; refrain from adverse action to property rights of the other spouse, exercise due care on management affairs affecting community property, and refrain from gross negligence.
Preliminary Declaration of Disclosure (PDOD)– To reduce litigation costs, the legislature has Imposed the duty to disclose to the other spouse: all current income through an Income and Expense Declaration form while attaching three current pay stubs, two current years of tax returns, all assets and liabilities (debts) providing this information in a form of a Schedule of Assets or Debts (SAD).
All the documents are provided to the other party in what are called Declarations of Disclosure with a special cover sheet, which asks the declarant to divulge if there is any business opportunity to which the other party needs to be aware. Parties must exchange the PDOD within 60 days from serving the other side a Petition or Response as the case may be.
To facilitate settlement, it is a good policy to provide the Schedule of Assets and Debts with all the backup information to the numbers as attachments. For example, for the amount in a checking account, provide the end of month statements for the month prior to the date of separation, the month in which separation occurred.
Duty to Update-From the date of separation to the date of distribution of the assets or liabilities the parties have a fiduciary obligation to disclose all activity that affects the assets and liabilities of the other party. This means that if there is a major change in the status of Assets or Debts the party who manages these finances has a duty to provide an update.
Failing to abide by one’s fiduciary duty (called a “breach”) can result in an unequal distribution of community property or other sanctions imposed on the party in breach of his or her duty.
