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The Duty to Disclose Atlanta Lawyers

In Matrimonial Actions

While marital rights can vary from state to state, most states recognize that when people get married, spouses and/or partners owe a fiduciary duty to one another. What that means is that, once married, spouses have a duty to be honest with one another regarding finances and property, similar to the relationship between business partners.

Q: WHAT IS THE DUTY OF DISCLOSURE?

The duty of disclosure is an expansion of the fiduciary duty spouses owe to one another to protect and preserve the assets of a marriage and not to dispose of them without the consent of the other. In most jurisdictions, disclosure law requires spouses to exchange any information about the marital estate and its affairs that would be reasonably required for the proper exercise of each spouse’s rights and duties. Unless the demands are unreasonable or improper under the circumstances, a spouse must disclose any information regarding the marital estate, without demand. In other words, the duty to disclose is mandatory and must be complied with, even if the other party has not made an inquiry or formally requested disclosure.
Typically, the duty of disclosure requires, but is not limited to:

Q: HOW ARE DISCLOSURES MADE?

In most jurisdictions, spouses or partners in a dissolution or legal separation are required to exchange court forms that disclose complete information about all their property and debts, as well as details of their income and expenses.

Q: WHAT IS INFORMATION THAT WOULD MATERIALLY AFFECT COMMUNITY ASSETS AND DEBTS? ISS IT SUBJECT TO DISCLOSURE?

As mentioned above, each spouse in a divorce or legal separation proceeding must provide full and accurate disclo sure of all assets, debts, and other liabilities in which one or both parties may have an interest. Not only must these disclosures include a current income and expense declaration (both supported by documentation), but the declaration should also include any changes that could materially affect community assets and debts.

The type of information that would be deemed to materially affect community assets and debts includes (but is not limited to):

*Even when there is no economic harm caused by the nondisclosure, the court will still impose sanctions to demonstrate the importance of and encourage compliance with disclosure requirements.

Q: ARE INVESTMENT OPPORTUNITIES CONSIDERED 'ASSETS' FOR PURPOSES OF DISCLOSURE? IS THIS SO EVEN IF THE OPPORTUNITY YIELDS NO PROFIT OR LOSES MONEY?

Yes. In most states, the duty to disclose contemplates disclosure of any business, investment, or income-producing opportunity from the date of the marriage until the date of the separation. Failure to disclose such an opportunity is a violation of a spouse’s fiduciary duty and could result in various sanctions, monetary and otherwise. This is the case regardless of whether the opportunity yields no profit at all or even ultimately results in loss of profits.

Q: WHAT HAPPENS IF A PARTY FAILS TO COMPLY WITH THE DUTY OF DISCLOSURE?

Failure to disclose (whether inadvertently or purposefully) is a deemed a violation of the fiduciary duty owed to spouses and could result in various monetary and other sanctions including, but not limited to:

Q: HOW LONG DOES THE DUTY OF DISCLOSURE LAST?

It is important for parties to a dissolution proceeding to remember that in states like California, the fiduciary duty to disclose does not necessarily end by simply filing the final judgment of divorce with the court. As stated above, disclosure requirements are mandatory and not dependent upon the other party seeking the information through discovery. It is a continuing obligation that starts at the commencement of dissolution and terminates only when all assets (debt or property) are distributed and divided.

Ready to Get Started?

We can help. We can guide you through the consultation process starting with a scheduled call back from a member of our intake team. If you would prefer to speak directly and confidently with an attorney, a paid hour consultation is also available. To arrange a meeting, contact us today.

Ready to Get Started?

We can help. We can guide you through the consultation process starting with a scheduled call back from a member of our intake team. If you would prefer to speak directly and confidently with an attorney, a paid hour consultation is also available. To arrange a meeting, contact us today.