Divorce can be one of the most emotionally and financially challenging experiences in life. In California, a community property state, the law enforces strict rules to ensure that financial matters are handled fairly and transparently. One of the most critical aspects of this process is your fiduciary duty to your spouse. The fiduciary duty in marriage doesn’t end at separation—it persists until all marital assets and debts are divided and the divorce is finalized. Here’s a breakdown of what this duty means and why it matters:

Under California Family Code Sections 721, 1100, and 2100, spouses owe each other the highest duty of loyalty, good faith, and fair dealing. This duty resembles the obligations business partners owe to each other: full disclosure, transparency, and honesty in financial dealings. This means no hiding assets: all assets, whether they are in your name or jointly owned, must be disclosed. No improper transfers: you cannot transfer, conceal, or deplete assets without the knowledge and consent of your spouse. Fair management: managing marital property (even after separation) must be done with the intent of preserving its value and ensuring fairness.

California Family Code Section 2104 mandates full, accurate, and timely disclosure of all assets and liabilities. This includes real estate, vehicles, and other physical property; bank accounts, retirement accounts, and investment portfolios; debts, including credit cards, loans, and mortgages; income, expenses, and even prospective financial opportunities. As outlined in Section 1100(e), your spouse has the right to access all financial records related to the marriage. This includes tax returns, bank statements, and any documents supporting your disclosures. Your fiduciary duty doesn’t end with separation. It continues until the division of property is finalized or the court issues a judgment of dissolution of marriage.

California courts take fiduciary duty breaches very seriously. Failing to uphold this duty can lead to significant legal and financial repercussions. Under Family Code Section 1101, if you fail to disclose an asset or improperly transfer it, the court can award your spouse 50% or even 100% of its value, depending on the severity of the violation. A breach may result in an order to pay your spouse’s legal fees as outlined in Family Code Section 271. The court may demand a full accounting of all marital property and penalize you for failing to comply with disclosure obligations.

For example, hidden investments: if one spouse invests in a new business venture post-separation and fails to disclose it, they risk losing their share or being penalized heavily. Improper transfers: selling a community property asset (e.g., a vehicle or home) without notifying the other spouse could result in the non-consenting spouse receiving the full value of that asset.

To protect yourself, stay honest and transparent. Proactively disclose all financial information, even if you think it might not be relevant. Keep records: maintain clear documentation of your income, expenses, assets, and debts. Consult an attorney: legal counsel can guide you through your fiduciary obligations and ensure compliance.

Divorce is already difficult without financial missteps complicating the process. Upholding your fiduciary duty is not only a legal requirement in California but also the best way to protect your interests and achieve a fair resolution. California courts prioritize transparency and fairness in divorce proceedings. When in doubt, remember: honesty is the best policy. Failing to meet your fiduciary duty can lead to severe penalties, but following the rules can help you move forward with integrity and peace of mind.