All persons involved in dissolution of marriage, legal separation or modification cases must be aware of the fiduciary duties that have been established in the law. These duties require each party to disclose information and documents that are material to the case—without being requested.
In California, Family Code section 721(b) highlights some of the disclosure responsibilities. But the list is not exhaustive. These duties in the management and control of community assets continue, “until such time as the assets and liabilities have been divided by the court.”
The parties are subject to the standards provided in 721 as to all issues relating to the support and fees, including immediate, full and accurate disclosure of all material facts and information regarding the income and expenses of the party “from the date of separation to the date of a valid, enforceable and binding resolution of all issues relating to child, spousal, and professional fees.”
To implement the rules establishing the fiduciary duties between spouses, the law requires parties to exchange their preliminary and final declarations of disclosure. These disclosures consist of the following: detailed schedules of assets and debts, reporting of any important developments that might affect the marital assets and debts, completed income and expense declarations on court-mandated forms.
The court cannot file a judgment resolving the parties’ property rights until the declarations of disclosure have been exchanged. However, the final declarations do not have to be exchanged if the parties have agreed in writing to dispense with that requirement.
The consequences of not complying with the legally imposed fiduciary duties can be severe. If a party is found to have violated his/her duties, the court can do any or all of the following: Impose monetary sanctions (In Marriage of Feldman), make the party pay the other party’s attorneys fees, court costs and other litigation expenses. The court further award all—not just half—of an asset a spouse has concealed to the other spouse (In Marriage of Rossi). Prevent the offending spouse from presenting his/her case in court or set aside a court order or judgment that was entered as the result of the party’s failure to comply.
The bottom line is that the days of “hide the ball” divorce litigation, where one or both of the spouses would conceal important information and documents from the other spouse, are clearly a thing of the past. In light of the severe sanctions that I have outlined above, each spouse must actively engage in complete and ongoing disclosures at all times.
Any questions or comments, feel free to email me directly at [email protected] or call my office at 310-601-7144.