Hidden/Missing assets in a divorce, termination of domestic partnership, or legal separation is an issue that can greatly affect a parties’ property rights and financial interests. California is a community property state following the general presumption that all assets acquired during marriage are community property, entitling each party to a 50% share. However, a community property asset can only be divided 50/50 if the asset is known and available. Consequently, it is not uncommon for a party to hide assets in preparation of a divorce, domestic partnership termination, or legal separation.
California recognizes that spouses and domestic partners owe a fiduciary duty to one another, requiring the parties to act in the highest good faith. A breach of this fiduciary duty occurs when a party hides, encumbers, disposes, or fails to disclose community property. Often, the non-breaching spouse is unaware of the other spouse or domestic partner’s misconduct. As a result, their financial interests may be significantly impaired. The family law attorneys at Aeschleman Law have valuable experience in reviewing financial records, tracing funds/assets, and exposing breaches of fiduciary duty to ensure that the non-breaching party’s financial interests are secured.
Failure to Disclose an Asset
One of the primary ways the fiduciary duty between spouses and domestic partners is breached is by failing to disclose an asset(s) during the divorce, termination, or separation process. Under Family Code §2100, parties are expected to make full and accurate disclosures of property. Notably, when a party fails to disclose assets, the Court may set aside the property division judgment.
Per Family Code §1101(g), the aggrieved spouse has specific statutory remedies available to him/her. For instance, at a minimum, the aggrieved spouse shall be entitled to 50% “of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.” This means that the breaching spouse will be obligated to reimburse the aggrieved spouse one-half the value of the asset(s) that was misappropriated or undisclosed.
Additionally, per Family 1101(h), where the breaching spouse engaged in behavior rising to the level of “oppression, fraud or malice”, the aggrieved spouse shall be entitled to 100% of the asset or value of the asset.
Valuation of Undisclosed Assets:
Notably, the valuation of the undisclosed or misappropriated asset will be calculated at the asset’s highest value at time the breach of fiduciary duty occurred, the sale or disposition of the asset occurred, or the date the court makes it’s award. See 1101(g); See also Marriage of Margulis (2011) 198 CA4th 1252, 1278.
The Court does have authority to order the breaching party to pay the non-breaching party’s attorney’s fees and costs associated with the breach of fiduciary issue. Attorney’s fees and costs awards are mandatory when the breach does not rise to the level of oppression, fraud, or malice. When the breach does rise to oppression, fraud, or malice, attorney’s fees and costs awards are discretionary. Both discretionary and mandatory awards are subject to the breaching party’s ability to pay. Please see Aeschleman Law’s attorney’s fee page for more information.
Get Legal Advice about Hidden/Missing Assets in California
The divorce lawyers at Aeschleman Law can help you ensure that all the marital assets are properly disclosed to avoid any potential breach of fiduciary duty claims. Alternatively, the family law attorney’s at Aeschleman Law can assist you in discovering undisclosed assets and then will advocate on your behalf to make sure your financial rights are protected.
Please view our Hidden/Missing Assets Information Center for more detailed information related to breach of fiduciary duty and hidden and missing assets.
Aeschleman Law is located in San Jose and serves Santa Clara, Alameda, and San Mateo Counties. Call us today for an initial consultation at (408) 724-8930. You may also contact us by filling out the form on the bottom of this site.