Wasting Community Property

California law provides legal recourse if a spouse recklessly wastes or dissipates community property.

In California, spouses owe each other a high fiduciary duty. This requires fair and responsible management of shared financial resources. When a spouse squanders marital property through reckless behavior, it is treated as a breach of that duty.

Examples of such reckless behavior include:

Severe gambling losses;
Unauthorized risky trading;
Spending on affairs;
Other hidden spending.

However, courts do not penalize normal poor investments or isolated bad choices. There needs to be a reckless pattern or intentional waste.

Sometimes it makes sense to hire a forensic accountant to trace exactly where the funds went. They may also be able to calculate the precise amount of the community property waste. Other times, working with a divorce mediator or a CDFA may be all that’s needed.

Legal Recourse and Remedies

Normally a spouse who is a victim of such behavior and the resultant wasting of community property, seeks recourse through a divorce or legal separation. Your primary path forward is to assert a breach of fiduciary duty claim within your existing divorce or legal separation case. The court will address the financial waste directly during the division of assets.

Under California Family Code Section 1101, you can make a reimbursement claim. You will need to show that your spouse’s reckless actions impair your 50% share of the community property. If the court finds in your favor, it may credit your share or order the reckless spouse to pay back the wasted amount.

When the liquid assets are gone, the judge can award you a larger portion of the remaining community property to offset the losses.

If you can prove your spouse intentionally hid, moved, or fraudulently transferred the money without your consent, California Family Code Section 1101(h) allows the court to award you 100% of that asset, rather than just the half that was your community property.

Sometimes a spouse uses community funds to pay off their own separate debts or to maintain an asset they owned before marriage. In this situation, the court will typically order a dollar-for-dollar reimbursement back to the community estate.

The court can also order the offending spouse to pay your legal fees and court costs incurred while trying to recover or track the misused property.