Fiduciary Duty

In a California marriage, both spouses are held to a high standard in their dealing with each other.  The standard is that of a fiduciary.

This brings a moral, ethical, and legal obligation to act in good faith, to ensure fair dealing, and to avoid taking unfair advantage of the other.

The duty pertains to all aspects of the relationship.  For example, it includes the choices you make, the information you share and the documents you keep.

The fiduciary duty begins when you get married.  If you get divorced, it extends until the time all assets have been distributed or divided.  This means until each spouse has complete control over the assets that have been assigned to them in the divorce.

Normally this will be some time after the divorce agreement has been signed by both spouses.  Note that the duty doesn’t necessarily end on the date of the divorce judgment.

Scope of Fiduciary Duty

The fiduciary duty applies not only to community property but also to your spouse’s separate property.

Fiduciary duty during a marriage is broad.  For example, you must:

• Readily share information about community assets and debts. This includes maintaining good records.
• Be transparent in large and small decisions affecting community property.
• Avoid mismanaging community property. This includes engaging in activities that are adverse to the community, whether intentionally or accidentally.
• Avoid using your separate property to compete with your spouse or the community.

As noted above, in a divorce the fiduciary duty continues until all property has been divided.  Your responsibilities after the date of separation include a duty to report:

• Changes impacting the community’s assets and debts.
• Changes in your employment status and/or income.
• Tax issues concerning the community’s assets or debts.
• Lawsuits that may impact the community’s assets or debts.
• Offers to purchase the community’s business or other assets.
• Opportunities related to retirement or investment options.

Breach of Fiduciary Duty Consequences

Sometimes in the context of a divorce, a spouse discovers that the other has committed a breach of their fiduciary duty, such as failing to disclose asset(s) or debt(s).

If you think your spouse or ex-spouse has breached their duty, there are several avenues available to you under California Family Law.  If the matter goes to court, there could be an award of any of the following:

• Sanctions (monetary penalty for bad behavior)
• Attorney’s fees and costs
• Your half of the asset
• In the event of malice, oppression, or fraud, up to 100% of the asset.

Proving a breach of fiduciary duty is often challenging.  This is especially true when documentation is accidentally or intentionally hidden.

If you think your ex-spouse may not be acting in good faith toward you, your separate property assets under their control, or the community, advise your divorce mediator.  If the matter isn’t quickly resolved, it would be wise to discuss your options with an experienced divorce attorney.