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How does the spousal fiduciary duty impact divorce?

On Behalf of | Jan 4, 2022 | Property Division

Most married couples probably don’t realize it, but California law imposes a legal duty on them and how they deal with each other. In a way, this duty can become more relevant once the couple has filed for divorce than it ever was during the marriage. So it’s important to understand what that duty is and how it relates to divorce proceedings.

What is the spousal fiduciary duty?

Fiduciary relationships exist frequently in the business world. The basic idea is that someone who owes a fiduciary duty to another must put the other’s interest before their own. Think of an investment broker, for instance, who manages money for a client. The fiduciary duty they owe requires them to manage the client’s money according to the client’s interests, rather than their own. The California Family Code places a similar duty upon spouses, mandating that they act toward each other with good faith and fair dealing.

The spousal fiduciary duty does not end the moment a divorce commences. Instead, Family Code Section 2102 requires that the fiduciary relationship remains in place until all the couple’s property has been divided. This includes both assets and liabilities. Furthermore, although property division will often occur with the final divorce decree, this is not always the case. In some instances, complete property division can extend beyond the final judgement, keeping the fiduciary duty alive even though the couple is now divorced.

The reason behind the duty, and its lasting nature, is to protect both spouses and preserve relevant property. It’s relatively common for one spouse to have more control over marital funds or certain assets than the other spouse. Without the fiduciary duty, once a divorce action begins, the spouse who controls the property could take action advantageous to themselves but harmful to the other spouse.