Fiduciary Duties of Divorcing Couples

There has been much recent talk in the family law legal community about the fiduciary duties divorcing spouses have to one another.  The Family Code imposes a duty on spouses, whether married or divorcing, to act as fiduciaries in the management and control of the community assets and liabilities.  This means spouses must fully disclose all information regarding the assets in which the community has or may have an interest and debts for which the community is or may be liable.  Spouses must also provide equal access to all information, records, and books that pertain to the value and character of those assets and debts, upon request.  Note that this duty applies while a divorce in pending, until the time that the assets and debts are divided.

If someone breaches his or her fiduciary duty, the other side is entitled to an award equal to at least 50% of undisclosed or transferred asset, plus attorney fees and costs.  If the other side can prove that there was oppression, fraud, or malice on the part of the “breacher,” the court may order damages amounting to 100% of the undisclosed or transferred asset.  The most well-known example of this in California is a case where the wife won the lottery and failed to disclose it to her husband, who she was in the process of divorcing.    The Court of Appeal held that the husband was entitled to 100% of the lottery winnings because the wife had fraudulently concealed them. 

Parties to family law proceedings are held to such a high standard of disclosure of financial information, that the party who is in the superior position to obtain financial information must do so.  A party may not simply claim he does not have the information in his custody or control – if s/he is in the better position to obtain it, s/he must do so, and referring the other party to documentation to go find the information herself is a fiduciary duty violation.