Show Me the Money! How a Los Angeles Divorce Lawyer Can Help You Divide
Concealed, Hidden or Omitted Assets During Your California Divorce
Post-Judgement Motions Under California Family code Section 2556
Wife belongs to a lottery pool at work and contributes about $5 per week
to the pool. Suddenly, Wife gets a phone call from a coworker informing
her the group won the lottery and the prize was in the amount of $6,680,000.
Wife is elated at the news…especially when she learns her share
of the prize money is about $1,336,000.
The problem – Wife is unhappily married. She was thinking about
divorce, and believed if she told her Husband the truth about the money he would
try to take all of the money away from her during the divorce. Wife heads
over to the lottery office to explain her situation to them. The lottery
office suggests Wife should file for divorce before she ever receives
her first lottery check. Rather than tell Husband about the lottery money,
Wife serves Husband with divorce papers.
To make sure her Husband does not discover the lottery winnings during
divorce, Wife uses her mother’s personal address to receive checks
and other information from the California Lottery. This will ensure Husband
would never discover the lottery checks. In fact, Husband never learns
about Wife’s good fortune during the divorce. Shortly after the
divorce, Husband begins to experience some financial difficulty and files
for bankruptcy. A couple of years after the divorce Husband inadvertently
receives a letter from the California Lottery intended for Wife. The letter
is asking Wife if she would like to receive a lump-sum buyout of her lottery
winnings. This is the first time Husband learns about Wife’s lottery winnings.
Can Husband take any action in family court to force Wife to divide the
previously concealed lottery winnings?
“Show Me The Money!” Yes. Husband did in fact ask a California
court to divide lottery winnings that were concealed from him during his
divorce from Wife, which was subsequently omitted from the judgment. (
Marriage of Rossi (2001), 90 Cal.APP.4
Rossi, a California trial court held that Wife’s failure to disclose the
existence of her lottery winnings amounted to fraud and was a breach of
her fiduciary and statutory duty to disclose the existence of all property,
community and separate, to her spouse at the time of the divorce. The court in
Rossi awarded not just half or 50% of the lottery winnings to Husband, but 100%
of the lottery winnings to Husband because of Wife’s concealment
of the money during their divorce. The Court of Appeals affirmed the decision.
We are commonly asked if it’s necessary to disclose all assets and
debts of a marriage during divorce. The result in Rossi is probably one
of the best examples of why you should be truthful about the assets and
liabilities of a marriage when getting a divorce in California.
Rossi highlights the importance of the fiduciary obligation between spouses
under California law, and shows that in the case of concealment a family
law court can impose a harsh remedy and you will put your share of the
asset at risk.
California requires full disclosure of all assets and liabilities in a
marital dissolution (divorce), legal separation or nullity of marriage
proceeding. The legislature laid out the state’s policy to preserve
and protect community and quasi-community assets and liabilities in Family
Code Section 2100. You can find reference to fiduciary obligations owed
between spouses among various sections in the California Family Code such
as Section(s) 721(b), 1101(e), 2100, 2102, and 2103-2107.
Consider Filing a Post-Judgement Motion to Adjudicate any Concealed or
Omitted Assets Under Section 2556
California permits the filing of a post-judgment motion to divide an omitted
asset under California Family Code Section 2556. There can be various
types of assets omitted in divorce. For example, omitted assets can include
real or personal property, bank accounts, certificates of deposit, money
market accounts, individual retirement accounts, stock options, 401K,
KEOGH and vehicles.
If you believe there were assets omitted in your original divorce judgment,
California Family Code Section 2556 gives the family law court continuing
jurisdiction to divide any assets or liabilities that were not disclosed
or dealt with originally.
California Family Code Section 2556 states as follows:
“2556. 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. A party may file a post-judgment motion or order to
show cause in the proceeding in order to obtain adjudication of any community
estate asset or liability omitted or not adjudicated by the judgment.
In these cases, the court shall equally divide the omitted community estate
asset or liability, unless the court finds upon good cause shown that
the interests of justice require an unequal division of the asset or liability.”
If you or your spouse fails to include the asset or liability during your
divorce, a former spouse/partner is entitled to file a post-judgment request
to adjudicate the asset or liability. The court in California has authority
to divide the asset equally, unless there is a showing of “good
cause” for the court to do otherwise.
Tools of a Divorce Lawyer: Uncovering Intentional conduct or Concealment
of an Asset
An experienced Los Angeles divorce lawyer from Castellanos & Associates,
APLC will use several powerful tools to help you uncover any hidden or
omitted assets during the marriage:
- The Discovery Process
- Private Investigator
- Financial Advisors, including a Forensic Accountant
Declaration of Disclosure
As we saw in
Rossi, when you fail to disclose an asset during the divorce process, you risk
loosing the entire asset. In order for the court to enter a final judgment
in any dissolution, legal separation or annulment case in California,
you and your spouse/partner will be required to disclose the nature and
extent of all of your marital/partnership assets and debts. This is accomplished
when you complete and serve certain mandatory forms such as the Declaration
of Disclosure, Schedule of Assets and Debts and Income and Expense Declaration
on your spouse/partner. Once the other spouse/partner is served, you must
then make sure you prove to the court that you in fact served the other
party and complied with this requirement by filing a Declaration Regarding
Service of Declaration of Disclosure with the court.
Preparing these forms are a part of the divorce process in California and
both you and your spouse/partner must comply by completing your own forms
and serving the other party. A preliminary and final Declaration of Disclosure
must be served on the other party with certain exceptions.
At Castellanos & Associates, APLC, we routinely ask our clients to
complete the Declaration of Disclosure, including the
Schedule of Assets and Debts form on which you are required to list all marital assets and obligations.
We will also ask you to complete the
Income and Expense Declaration form. Both forms can be downloaded from our website.
Contact a Los Angeles Divorce Lawyer for a FREE Consultation Today!
If you need help with your
modification of existing orders, or if you would like to discuss the filing of a post-judgment motion
under Family Code Section 2556, request a
FREE consultation today from a Los Angeles Divorce Lawyer at Castellanos & Associates, APLC
at (323) 655-2105. We look forward to helping you move on with confidence
and peace of mind!