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Pre-Divorce Agreements and Financial Disclosures in California Divorce Cases – In re Marriage of Evans

State law generally requires spouses seeking a divorce in California to provide each other with a declaration detailing their assets and liabilities. This allows each spouse to have a clear financial picture before the divorce is granted, and helps a court – or a mediator – determine whether (and how much) spousal and child support should be awarded.

wedding-rings-1426580-mAs divorce lawyers, we strive to help clients resolve issues related to a divorce amicably and without long, drawn-out legal battles whenever possible. That raises the question:  what if the spouses reach an agreement before they exchange the necessary declarations? California’s Fifth District Court of Appeals took on this issue in a recent decision.

Husband and Wife separated in March 2007, after roughly 22 years of marriage. Before filing a petition for dissolution of the marriage, the couple executed an agreement by which Husband pledged to buy out Wife’s one-half interest in the home that they owned together. They assumed that the house was worth $600,000 at the time, and Husband agreed to pay Wife $300,000 for her share of the property. He paid $197,000 up front, owing Wife an additional $103,000.

Wife filed for divorce in 2009, and the spouses exchanged the required financial disclosures more than two years later. At that point, the house was valued at $420,000. It also had an unpaid loan attached to it in the amount of $350,000. That left the property’s net equity at roughly $70,000. Husband filed a motion asking the trial judge to set aside the pre-divorce agreement, arguing that it wasn’t enforceable because the parties hadn’t yet exchanged the required financial disclosures when they entered into the contract. The trial judge disagreed. The court ordered Husband to pay Wife the remaining $103,000 owed under the agreement.

Affirming the decision on appeal, the Fifth District said the preliminary financial disclosures are not required to be exchanged until a spouse actually files for divorce. “Service of a preliminary disclosure declaration is not required before the petition for dissolution is filed and served,” the Court explained. “Instead, the petition prompts the requirement for an exchange of preliminary disclosure declarations and, therefore, preliminary disclosure declarations are obligatory only when a dissolution proceeding has commenced.”

The Court further explained that divorcing spouses are free to enter agreements related to the divorce before actually filing for divorce. It also noted that neither Husband nor Wife asked for a disclosure before entering into their pre-divorce contract. As a result, the Court found that Husband was on the hook for the remaining $103,000 under the agreement.

This is just one example of why a person who’s thinking about getting a divorce should seek legal counsel before making any moves. An attorney can help you consider your options and protect your interests. If you’re considering seeking a divorce in California, contact San Jose divorce lawyer John S. Yohanan. With more than 30 years of experience, Mr. Yohanan is an accomplished family law attorney who has helped a number of clients resolve a wide variety of issues on optimal terms. Call our office at (408) 297-0700 or contact us online to schedule a consultation.

Related blog posts:

In Divorce Cases, It’s ‘Speak Now or Forever Hold Your Peace’ – In re Marriage of Geiger

Court Says Mediated Settlement Agreement is Admissible, Enforceable – In re Marriage of Daly and Oyster

Earning Capacity and California Spousal Support Decisions – In re Marriage of Torok