Understanding Fiduciary Duties in Marriage
When it comes to marriage, the state of California not only recognizes the emotional and social union but also imposes certain legal and fiduciary responsibilities on each spouse. Understanding the fiduciary duties between husband and wife is crucial for any married couple residing in California. This blog post aims to demystify these responsibilities
What is Fiduciary Duty in Marriage
Under California law, a fiduciary duty in marriage refers to the highest duty of good faith and fair dealing that each spouse owes to the other. Essentially, this means that each spouse must act in the best interest of the other, especially when handling financial matters. This duty is akin to the responsibility that business partners owe each other in a partnership.
Specifically, the California Family Code Section 721(b) articulates this duty, stating that in any transaction between the spouses, whether or not it involves a community property asset, each spouse must act with the highest good faith and fair dealing.
The fiduciary duties encompass various aspects, including:
- Disclosure: Full and transparent disclosure of all financial information, including assets, liabilities, income, and expenses.
- Access: Providing each spouse reasonable access to all information, records, and books that pertain to the value and character of those assets and debts.
- Accounting: Accurate and complete accounting for any benefit or profit derived from any transaction involving community property.
What kinds of Breaches Happen During Marriage?
- Omitting an asset during mandatory financial disclosure
- Changing an asset from separate to community property, or community to separate property, without a spouse’s knowledge or consent
- Using marital assets instead of separate assets to pay off separate debts
- Mismanagement of community assets
Consequences of Breaching Fiduciary Duties
Breaching fiduciary duties can lead to serious legal consequences. Family Code Section 1101 outlines these repercussions:
- Fees and Costs: The court may order the spouse who breached their duty to pay the other spouse’s attorney fees and court costs.
- Financial Penalties: In cases of an intentional or malicious breach, the offending spouse may be required to pay 50% of the value of the undisclosed or transferred asset, and up to 100% as a penalty.
The fiduciary duties between spouses in California are integral to maintaining trust and fairness in a marriage, especially regarding financial matters. Understanding and adhering to these duties is vital for every married couple in California
If you believe that your spouse has breached their fiduciary duties, or if you have any questions regarding your financial responsibilities in your marriage, consult with a Family Law Specialist for personalized guidance and support.