Traditionally associated with relationships between business partners, a fiduciary duty is the highest duty of fair dealing and good faith. It’s important to know that a fiduciary relationship also exists between spouses under California law. A fiduciary relationship between two people is created when they enter into a marriage. These duties apply to each spouse equally. The duty continues throughout the marriage until the marriage is dissolved and all property is distributed. This means the duty can last in situations where the division of property is not completed before the dissolution of the marriage.
What Does the Fiduciary Relationship Require?
The fiduciary duty between spouses is more than just a general requirement to deal fairly and to prevent one party from taking unfair advantage of the other. California law also requires wide ranging disclosure regarding marital assets. These laws include:
- Access to any property or financial records related to marital property
- Prevent a spouse for selling any household items before dissolution of the marriage
- Inform the spouse of any interest or thing of value accrued from marital property
- Keep all records related to marital property clear and legible
What Happens if the Fiduciary Duty is Breached?
Any breach of these duties can lead to serious consequences from a court of law. This is the case whether the breach was intentional or inadvertent. Failure to disclose information required by the court can lead to monetary sanctions in the amount of 50% – 100% of the value of the asset that wasn’t disclosed or handled appropriately. A spouse can be liable for attorney’s fees and court costs on top of these steep sanctions. In the most extreme cases, a failure to disclose a marital asset can lead to a divorce decree to be set aside to allow for redistribution of the community property.
Is it Worthwhile Discussing This With a California Divorce Attorney?
Yes. The rules regarding fiduciary duties between spouses during separation and divorce in California are complicated. If you have questions Hoover Krepelka, LLP is ready to help.