On January 1, 2010, California law will change to help prevent spouses from obstructing the completion of a divorce by failing or refusing to satisfy disclosure requirements. Assembly Bill 459 does not change the disclosure requirements themselves, but adds "an additional option" for when one party who has complied with the rule but the other has not. Here is how the Legislative Counsel's Digest explains the bill:

Existing law requires each party to a proceeding for dissolution of marriage or legal separation of the parties to serve on the other party a preliminary declaration of disclosure of assets, as specified, and a final declaration of disclosure, as specified, unless service of the final disclosure is waived. Existing law requires each party to serve a preliminary declaration of disclosure after or concurrently with service of the petition for dissolution or nullity of marriage, or legal separation of the parties. If a party fails to serve a preliminary or final declaration of disclosure, as specified, or fails to provide information required in those declarations with sufficient particularity, if the other party has served the respective declaration of disclosure, and if the noncomplying party also fails to comply with a request for the preparation of the appropriate declaration of disclosure or further particularity, existing law authorizes the complying party to file a motion to compel a further response or for an order preventing the noncomplying party from presenting evidence on issues that should have been covered in the declaration of disclosure.

Existing law generally prohibits entry of judgment with respect to the parties' property rights unless each party, or the attorney for that party, has executed and served a copy of the final declaration of disclosure and current income and expense declaration. Existing law requires a court to set aside a judgment when the parties have failed to comply with all disclosure requirements, as specified.

This bill would add, as an additional option that a complying party may pursue if the noncomplying party fails to comply with the request described above, the option to file a motion showing good cause to grant the complying party's voluntary waiver of receipt of the noncomplying party's disclosure, as specified. If that motion is granted, the bill would require the court to set aside a judgment only at the request of the complying party, unless the motion is based on actual fraud or perjury, as specified.

So AB 459 is designed to solve a problem that arises when both parties have appeared in the dissolution action but one of them refuses to provide the required disclosures: the court is not allowed to enter a judgment of dissolution. Under the new law, so long as one party complies, that party can ask the court to approve a waiver of the right to receive disclosures from the other party. But the noncomplying party has an incentive not to let this happen: if that waiver is approved, then only he complying party can have the judgment set aside, unless the request is based on "actual fraud" or "perjury." In other words, one spouse cannot hide assets, refuse to provide disclosures, and then turn around after the judgment is entered and try to have that judgment set aside—unless he or she can show that the complying party lied in his or her disclosures or committed some other kind of fraud that prevented the noncomplying party from complying. 

One of the obstacles waiting for people when they embark on the swirling seas of family court litigation is disclosure. Any time we ask the court to divide up marital property, determine an amount of spousal or child support, or award attorney's fees, the court needs lots and lots of information about the parties' property, money, and debts. In California, most family court litigants are (or will soon become) familiar with forms like the Schedule of Assets and Debts and the Income and Expense Declaration (or the Financial Statement (Simplified)). (Those are all links to PDFs, by the way.) Completing those forms is not quite as onerous as doing your taxes or preparing a bankruptcy petition, but when you're already worried about your children, your finances, your relationships, and all the other problems that bring people into the family court, it's easy to feel overwhelmed. Fortunately, there are some things you can do to make life easier—and they happen to be good ideas even if you never find yourself in family court.

Keep Good Records

Before you do anything else, get your records organized. Find a safe place to keep paycheck stubs, bank statements, mortgage documents or rental or lease agreements, vehicle registration and maintenance records, bills (whether you paid them or not), tax returns, and any other document that shows money or property you receive, money you owe, stuff you own, and real estate you own or occupy. This can be especially easy when you're doing things online. Most banks and businesses can give you statements and other documents in Portable Document Format (PDF), which you can save on your computer for easy viewing or printing later. For things that you don't have on the computer, the least you can do is buy an expandable folder with several slots to keep different kinds of documents. If you want to invest more money, buy a small file cabinet, or even a safe for your really important documents.

Documents for big things, like tax returns and receipts for major purchases, should be kept for seven years. Bills can be discarded more quickly, but you should probably keep them for a year. Use your discretion. But you would also do well to keep track of regular and recurring expenses somewhere. There are some software tools for personal finance management, like Quicken, which you might want to use, but I just use ordinary spreadsheet software. (I have a Mac and use Numbers. On Windows, Microsoft Excel can do the trick, too.) For example, I use a spreadsheet to keep a list of payments on utility bills, so I can see clearly how my utility costs are changing over time, which allows me to plan better for the future. If you are not comfortable using spreadsheet software, buy a notebook and write down the dates and amounts for these expenses. This comes in handy when you are making a budget. There are also some excellent apps for the iPhone.

Keeping all of these records also makes it easier when you need them for something important, like going into family court, filing for bankruptcy, or just planning for your future. Keeping track of these things will give you a sense of greater control over your life, too. 

Watch Your Spending

You need to be conscious of where your money is going. If you have no idea what you spend each month on, say, groceries and dining out, then you probably have a hard time keeping your spending within reasonable limits. It's much easier to prepare for the future, plan your expenses, and live comfortably within your means if you pay attention to where every dollar goes. And if you have never paid attention to these details before, you might be surprised by what's revealed when you start.

Keep receipts whenever you buy things. Write down what you spend in certain categories, like gas and car expenses, dining out, clothing, or other things you regularly purchase. (The categories will probably be unique. For example, I categorize spending on books because I am one of those people who can barely stand to walk past a bookstore without buying something. If you collect something, make a category for it.) This is another place where spreadsheet or specific financial software can be useful.

Make a Budget

One of the best ways to help keep your life in order is to keep track of where your money goes. I know you've heard this before, but make a budget. It's not as hard as you might think. Follow the steps below.

First, figure out your income. If you work for wages or a salary, you probably get paid once a month, twice a month, or biweekly. Figure out how much you bring home every month (your net pay) by looking at your paycheck stubs. For people who are paid once or twice a month, this should be pretty easy.

If you get paid biweekly, then you can approximate your monthly income by taking the usual amount of your paycheck, multiplying times 26 (for the number of checks you get each year), and then dividing by 12 (for the number of months in the year). For example, if you take home $1,500 every two weeks, then $1,500 times 26 is $39,000, and that divided by 12 gives you net monthly income of $3,250.

If your paychecks vary, then figure out an average. This is one of the reasons why it's important to keep good records. You will need to be able to look back six months to a year, add up your net pay, and figure out an average that will help you with budgeting. If your attitude has always been that your income varies and it's not worth trying to predict it, you are probably wrong about exactly how much it varies and are missing out on a valuable opportunity to take control of your financial future.

Second, make a list of all your obligations. This includes all the bills you have to pay and all your usual monthly expenses. Make a list of when those bills are due. If you get paid twice a month, you might want to figure out if your month is lopsided, with more bills to pay during one half than the other, and ask some of your creditors to adjust your due dates. You should also figure out your non-monthly expenses, like property taxes, and figure out the monthly average for those. Get in the habit of depositing that average amount into your savings account and holding that money until those non-monthly bills come due. So, for instance, if you pay property tax is $1,500 twice a year, then you might set aside $250 every month ($3,000 divided by 12) and do not spend it until you need it to pay the property tax bill. You can add that $250 to your budget like any other monthly expense.

For day-to-day expenditures, like what you spend on food or gas for your car, this is another time when having good records is helpful: look back over the last six months to a year and figure out a monthly average for each category. Use that average as a starting point for your budget. For example, if you see that you're spending $500 a month on eating out and that number seems high to you, then set yourself a lower budget and try to stay within it.

Third, add up your numbers, make a plan, and stick to it. On a sheet of paper, or with your favorite software application, write down all your obligations and expenses. Add them up. Compare that total with your monthly income. If all your expenses amount to less than your total income, you are doing well. Try to stay within your budget. Better yet, see if you can cut some of your spending and increase your savings. But if your total expenses are greater than your total income, then you need to make some cuts. Stay within your budget. Do not spend more than you can afford. Do not live off your credit cards. If you are not earning enough money to live comfortably, then look for ways to supplement or increase your income.

Conclusion

This is just basic stuff. There are plenty of more complicated things you can do—things you should see a financial advisor about. But everybody should do these basic things, no matter how much you earn, no matter how much you have.

Keeping good records, watching over your spending, and sticking to a budget may sound like a lot of work, and it is, but you will be glad you did it. Be consistent. Turn it into a habit. You will feel better about yourself and more confident in your financial decisions. Instead of feeling like your financial situation is a mystery, you will know where you stand. And when the time comes to make decisions or disclosures, no matter the reason, you will be prepared. You might even find yourself avoiding those kinds of situations in the first place.