Breach of Martial Fiduciary Dutites and Their Consequences

By Donald A. Hayes, Esq. Attorney at Law


In California each spouse owes a statutory fiduciary duty in transactions between themselves and in the management and control of the community property. That duty is codified in Family Code §721 and §1101. A fiduciary duty is a duty arising to the level of the highest good faith and fair dealing imposed upon those occupying confidential relations. The fiduciary duty is not unlike the duty imposed upon non-marital business partners, investment advisers, attorneys, accountants, and other professional relationships.

The parties respective fiduciary obligations continue after separation as to all activities affecting the party’s assets and liabilities, until the date of distribution of the community asset or liability in question. Once an asset or liability is distributed, fiduciary duties as to that asset or liability terminate.

Additionally, the respective fiduciary duties include immediate, full and accurate disclosure of income and expenses and continue post-separation as to all issues affecting child and spousal support, and professional fees until a binding resolution is achieved.

In the case of Marriage of Fossum, prior to the parties’ separation, Wife took a cash advance on a credit card of $24,000, but never disclosed the transaction to Husband. Although the parties disputed the use to which those funds were put, it was undisputed that Wife incurred the debt without disclosure to Husband, in violation of her fiduciary obligations to her spouse and the provisions of F.C.§ 721. The trial court found Wife had breached her statutory fiduciary duty to her spouse and that Husband was entitled to reimbursement from Wife for 50% of the amount of the cash advances, plus his attorneys fees. Important to note is that the court held that under F.C.§1101, a spouse’s statutory fiduciary duty of care arises “without reference to any wrongdoing” and that “once a breach is shown, the trial court lacks discretion to deny an aggrieved spouse’s request for attorney fees”.

Typically, most marriages are not run like businesses. One spouse is often the managing spouse by default for whatever reason and spouses rarely ask each other for formal consents before making routine purchases, charges, or investments. Nevertheless, such innocent transactions kept undisclosed could amount to a breach of the interspousal fiduciary duties upon dissolution, legal separation, or upon the death of a spouse.