What is Breach of Fiduciary Duty in Divorce Cases – Dacorsi Placencio P.C.

In California divorce cases, a breach of fiduciary duty occurs when one spouse fails to act honestly, fairly, and transparently toward the other spouse regarding financial matters. Under California Family Code sections 721 and 1100, spouses owe each other fiduciary duties similar to those owed between business partners. These duties require both parties to disclose all assets, debts, income, and financial transactions during the marriage and divorce process.
California is a community property state, meaning that most assets and debts acquired during the marriage belong equally to both spouses, REGARDLESS of whose name they are titled. Because of this shared ownership, each spouse has a legal obligation to manage community assets in good faith and avoid taking unfair advantage of the other spouse. A breach of fiduciary duty may occur when one spouse hides money, transfers property without consent, conceals investments, fails to disclose income, or spends community funds for improper purposes such as an extramarital affair.
One common example is when a spouse secretly withdraws funds from a joint bank account or undervalues a business interest during divorce proceedings. Another example involves failing to disclose cryptocurrency holdings, stock options, retirement accounts, or other valuable assets. California law imposes strict disclosure requirements, and intentional concealment can result in serious penalties.
When a court finds that a breach of fiduciary duty has occurred, the consequences can be significant. The innocent spouse may be awarded reimbursement for lost funds or a larger share of the marital estate. In some cases, the court can award 100% of an undisclosed asset to the wronged spouse under Family Code section 1101(h). Courts may also impose attorney’s fees and sanctions against the offending party.
Importantly, fiduciary duties continue from the date of marriage until the final distribution of assets in the divorce. Even after separation, spouses must continue to provide accurate and complete financial disclosures. Failure to comply can undermine settlement negotiations and damage credibility before the court.
Breach of fiduciary duty claims are often complex and require detailed financial analysis. Attorneys frequently work with forensic accountants and financial experts to trace hidden assets or improper transfers. Because these claims can substantially affect property division and support awards, individuals involved in a California divorce should seek experienced legal counsel if they suspect financial misconduct by their spouse.
Ultimately, California courts take fiduciary obligations seriously to ensure fairness and transparency in the divorce process. Honest disclosure and proper management of community assets are essential to achieving an equitable resolution for both parties. To protect yourself or uncover your spouses hidden assets call Certified Family Law Specialist Denise Lite at 877-317-8080. Offices in Valencia, Woodland Hills and Las Vegas.