For a successful divorce mediation, knowledge and acceptance of the disclosure duties by both parties at the outset of the process is key to building the trust necessary for a successful, efficient divorce process. An effective mediation process will help identify the assets and liabilities which need to be dealt with, including many that might not be so obvious – for example; sick and vacation pay accruals, and years of service contributed to a pension plan. Once a full disclosure is made, a trained family law mediator will then help the parties understand the character of the items, whether separate or community property or debt, and the impact of income and expenses on issues such as child and spousal support.
In all divorce cases, spouses have a fiduciary duty to disclose their finances to each other. This obligation is ongoing and requires that the parties update and augment their legal family law disclosure documents throughout the family court divorce process until judgment has been granted by the court. Failure to do so, even if the party believes it to be separate property, can result in a set-aside or reversal of the judgment and an award of the non-disclosed asset to the other party without offset.
“Hiding the ball” can be costly –think of the well-known lottery case (In Re Marriage of Rossi) where one party failed to disclose the $1.3 million winnings of a California lottery ticket and despite the party’s contention that the winnings were separate property, the family law court awarded the non-disclosed asset in its entirety to the other party.
Mediation is a great way to resolve a divorce amicably, but even in mediation, both parties will be required to make a full and complete financial disclosure to the other. By knowing this obligation at the outset can lead to an orderly, respectful, economical and complete resolution.
