Persons once they are married are in a fiduciary relationship. In transactions between themselves, spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.

This confidential relationship is a fiduciary relationship subject to the same rights and duties including but not limited to: (1) allowing each spouse access at all times, to any books kept regarding a transaction for the purposes of inspection and copying. (2) rendering upon request, true and full information of things affecting any transaction that concerns the community property. Nothing in this section is intended to impose a duty for either spouse to keep detailed books and records of community property transactions (3) accounting to the spouse and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse that concerns the community property. 

In fact, whenever, there is a transfer from one spouse to another a rebuttable presumption of undue influence arises if the transaction gives one spouse an unfair advantage over the another. In Marriage of Haines, the court based its holding on the unique protected status of marriage, and the fact that applying the presumption of the Evidence Code, Section 662, with its higher evidentiary standard, would in every case inevitably defeat the spousal protection intended by the Legislature in enacting section 721 of the Family Code (FC). (Haines, pp. 286-294, 301).

In addition, the court cited the principle that where two presumptions are in conflict, the more specific presumption applicable in a particular case must control over the more general presumption arising under ordinary circumstances. (Id. at p. 301, citing Rader v Trasher (1962) 57 Cal.2d 244, 252, 18 Cal.Rptr. 736, 368 P.2d 360; Mckay v Mckay (1921) 184 Cal. 742, 746-747, 195 P.385) 

Consequently, when any interspousal transaction advantages one spouse to the disadvantage of the other, the presumption arises that such transaction was the result of undue influence. The presumption that the advantage was gained by the exercise of undue influence continues until it is dispelled. The Haines court concluded that in every such instance, the presumption based on the confidential fiduciary relationship between spouses must prevail over the presumption based on record title.

Spouses are subject to special standards of disclosure towards each other with respect to, including but not limited to, their respective assets, based on their confidential and fiduciary relationship. Spouses have the right to “enter into”, transactions with each other, but must comport with the rules controlling the actions of persons occupying confidential relations with each other.

The competence of spouses engaged in transactions with each other is subject to scrutiny being pleasing to the fiduciary standard. The law from considerations of public policy, presumes such transactions to have been induced by undue influence if one spouse benefits to the detriment of the other spouse.  Family courts are courts of equity,

and they must “view gifts and contracts which are made or take place between parties occupying confidential relations with a jealous eye.” (Payne v. Payne (1909) 12 Aal.App. 251, 254 [107 P.148 [setting aside a deed from enfeebled, elderly woman to daughter-in-law upheld on grounds of undue influence even though no proof of fraud or deceit was determined.]

FC Section 2100 cites the obligations to disclose the existence of income, assets, and debts generally. Section 2100(c) makes it clear that not merely community property assets and earnings must be disclosed. All income sources and property must be disclosed “in the early stages of a proceeding for dissolution of marriage regardless of the characterization as community or separate property. Moreover, each party has a continuing duty to immediately, fully, and accurately update and augment for the resolution of any of these issues, or at the time of trial on these issues, each party will have a full and complete knowledge of the relevant underlying facts.” 

The court is provided significant and broad remedies available to it, upon finding of whether one party has violated his/her duties. “Hiding the ball” or concealing information or assets is likely to be costly strategy.

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CategoryLegal Advice