What Duties Do Spouses Owe to Each Other?
Marriage

What Duties Do Spouses Owe to Each Other?

Leave a comment

You have probably heard the term “fiduciary” used in the context of business relationships. In a nutshell, married people have a fiduciary duty to one another in all matters involving marital property. Marital property is anything of value that is obtained or accumulated while a couple is married.

California Family Code § 721 provides that “in transactions between themselves, spouses are subject to the general rules governing fiduciary relationships . . ..” What exactly does that mean? It means a duty of “good faith and fair dealing” with one another. This code section also states that the duty is the same as between business partners who are not married.

In practical terms, each spouse is obligated to ensure that in any action that adds to or diminishes marital property, the interests of the other spouse are protected. Section 721 authorizes spouses to enter into transactions with third persons. This can range from very basic things like buying a television to more complex things like investing retirement funds. The fiduciary duty imposed by the law protects the spouse who is not involved in the transaction.

The general idea of a fiduciary relationship is that one party trusts another to act on her behalf in financial matters. This is true in various business relationships, such as banking and investments, as well as in matters of marital property. The person being trusted has a fiduciary duty to ensure to the greatest extent possible that the trusting person’s financial interests are not harmed.

In many marriages, one of the spouses manages the household finances without much involvement from the other. The managing spouse functions as a trustee of the other spouse’s interest in the marital assets. If the managing spouse harms the other’s interest by error or fraud, then the trusting spouse has a cause of action just as she would against a business partner.

When a marriage is dissolved, disputes often arise regarding management of the marital assets by one spouse or the other. If a spouse is found to have harmed the other’s interest in the marital assets, California Family Code § 1101 permits the court to award an offset to restore the harmed spouse’s share of the marital assets she lost as a result of a transaction. This is true whether or not the managing spouse intended to cause harm. If a spouse is found to have fraudulently harmed the other’s interest, a court is required to grant 100 percent of the value of the fraudulent transaction to the harmed spouse.

In an ideal world, a spouse would never act in a way that is detrimental to the other. But that is not always the case. If you are contemplating divorce or need advice regarding matters of marital property, you should consult with an experienced California lawyer. The attorneys at the Law Offices of Judy L. Burger are experienced in difficult divorce proceedings and what it takes to sort out complexities in the marital estate. Call today to see how we can help you: (415) 293-8314.


 

Who “Owns” Money Damages Recovered by One Spouse During the Marriage?
Marriage

Who “Owns” Money Damages Recovered by One Spouse During the Marriage?

Leave a comment

Money damages received by a spouse as compensation for a personal injury that occurred during the marriage are owned by both parties. The money is marital property. As with most things that come up in the dissolution of a marriage, however, there are additional details to be considered.

While California Family Code § 780 provides that damages received for an injury that occurred during marriage are marital property, Section 781 states that if the injury occurred after entry of a final divorce decree or after separation of the parties, the money damages  are the separate property of the injured party. It is important to recognize, however, that whether a couple is considered legally separated can be complicated. If there is a formal separation approved by the court, there is no question. If not, the court considers various factors, including living arrangements, comingling of funds, and other indications of whether the couple otherwise functioned as if they were married.

If a couple dissolves a marriage during which one of the parties received money damages, California Family Code § 2603 provides for the allocation of those funds to the spouse who received them. But that is assuming the funds can be distinguished from other marital funds and have not been comingled. If, for example, the money was set aside in an investment account in the injured party’s name, that money, although marital property during the marriage, would be allocated to the injured spouse at the time of dissolution.

If the money damages were comingled with other marital funds, then they may be considered marital property at the time of dissolution. Where comingling is concerned, money damages are treated essentially the same as property owned by a spouse before the marriage. If the owning spouse allows the money or property to be comingled with other marital property, it is treated as part of the marital estate at the time of dissolution.

Once again, though, there are more details. Section 2603 also authorizes the court to allocate some of those funds to the non-injured spouse “after taking into account the economic condition and needs of each party, the time that has elapsed since the recovery[,] . . . and all other facts of the case.” If the court makes such an allocation, however, no more than one-half of the funds may be so allocated.

Division of the marital estate at the time a marriage is dissolved can be highly contentious and complicated. While state law provides the framework for issues such as money damages for personal injury, it also gives the courts broad discretion to achieve a fair outcome for both parties. If you are facing a divorce proceeding, especially one that involves a complicated estate, you should consult with an experienced California lawyer. The attorneys at the Law Offices of Judy L. Burger are well-versed in difficult divorce proceedings. Call today to see how we can help you: (415) 293-8314.

Who Controls Marital Property During the Marriage?
California Divorce, Marriage

Who Controls Marital Property During the Marriage?

Leave a comment

The assets a couple accumulates during marriage, for the most part, are marital property. This includes money and things of value such as automobiles, furnishings, and real property like the marital home. Each spouse is a 50 percent owner of the assets. There are circumstances under which property owned by one of the parties before marriage may become marital property, but that is beyond the scope of this article.

Marital property may be controlled by either or both parties to a marriage. Both own half of the property, and both have the authority to manage or dispose of the property but with this limitation: the controlling spouse cannot act in a way that diminishes the other spouse’s 50 percent share of the asset’s value.

The underlying concept of control of marital property is that marriage is a contract that imposes a “fiduciary duty” on each party. In the context of this discussion, the duty requires the spouse who exercises control over a particular asset to do so without damaging the other’s 50 percent interest in the property.

A good example of both the power to control an asset and the fiduciary duty is a car owned by a couple. Most married people officially title a car as belonging to John or Jane Doe. This means that in the eyes of the State of California, either John or Jane can assign the title of the car to a third person.

According to California Family Code § 1100, however, the party disposing of the car may not do so for less than “fair and reasonable” value without getting the consent of the other spouse. In the case of the car, the spouse could legally sell it according to state motor vehicle law, but if he did so for $10,000 less than its value without his spouse’s consent, the non-consenting spouse would have a claim against him.

In this example, the spouse selling the car has a fiduciary duty to the other spouse to maintain the value of her 50 percent interest in the fair and reasonable value of the car at the time of its disposition. A failure to do so results in the selling spouse being liable for that loss.

In the case of real property, it is little different. California Family Code § 1102 requires that any sale or encumbrance of real property, or its lease for more than one year, requires execution by both spouses. There is much less room for a spouse to take unilateral action without the other spouse’s agreement. A spouse is, however, authorized to encumber her half of real property for the purpose of engaging counsel once a proceeding for dissolution of the marriage has been commenced.

If you have concerns about your spouse’s management of marital assets, you should consult with an experienced California divorce lawyer. The attorneys at the Law Offices of Judy L. Burger will provide authoritative legal support tailored to your specific situation. Make the call today to learn how our attorneys can help: (415) 293-8314.


 

Can I Be Held Liable for Debts My Spouse Incurred if I Didn't Know about Them?
California Divorce, Debt

Can I Be Held Liable for Debts My Spouse Incurred if I Didn’t Know about Them?

Leave a comment

Spouses sometimes come into a marriage with debt and also separately incur debt during the course of the marriage. Sometimes these liabilities are known by the non-incurring spouse, and sometimes they are not. The basic rule in California is that both parties are liable for any marital debt accumulated during the marriage but before separation. This is true whether or not one of the parties even knew it was incurred.

Debts owed by a party prior to marriage, known or not to the spouse, are not the debt of the non-incurring spouse. At the time of a divorce, community property—property accumulated during the marriage—is used to satisfy community debt. If there is not sufficient community property to satisfy the debt, then both parties are assigned a portion of the debt to be paid from their own funds post-divorce.

Couples can sign pre-nuptial or post-nuptial agreements that allow debts incurred during marriage to be treated as separate debts under certain circumstances. For example, they might agree that a debt incurred unilaterally, with only the incurring party’s income and liabilities qualifying for the debt, is the separate debt of that party. Such agreements must be drafted carefully to ensure they are legally defensible if that becomes necessary.

Debt incurred by a spouse after separation but before divorce is that spouse’s debt, and the other spouse is not liable from her separate funds or her share of community property. There is but one exception to this rule: when the debt is incurred to provide the “necessaries of life” for the debt-incurring spouse and the separation is not by formal agreement.

If you need assistance in a family law proceeding, you should consult with an experienced California lawyer, especially if there are significant questions of debt and property ownership. The attorneys at the Law Offices of Judy L. Burger will provide authoritative legal support tailored to your specific situation. Make the call today to learn how our attorneys can help: (415) 293-8314.

California Divorce

How Are Appraisers Used in California Divorce Proceedings?

Leave a comment

How Are Appraisers Used in California Divorce Proceedings?In any divorce, the value of the marital estate must be established before the parties can be allocated their rightful share. The value many assets is obvious, but that is not the case for real estate. This type of property must be assigned a value. Most often, an appraiser will be hired to perform a formal litigation and real estate appraisal.


Real estate in a divorce usually is the family home, but it may also include vacation homes or business property. Business property is sometimes appraised within the context of the business itself being valued. See my previous blogs here regarding business valuations in divorce proceedings.


The parties to a divorce may retain their own appraisers or jointly select one. If the parties ultimately do not agree on a figure as suggested by the appraisal(s), the court will hear testimony and determine the fair market value. The appraisal of property can be pretty straightforward much of the time, but it can also become somewhat complicated and, at times, subjective.


Most appraisals are based on the sales of comparable properties in the geographic area. An average sale price is normally the key indicator, but any special or unique features of a home may increase or decrease the value assigned by a particular appraiser. For example, a detached garage converted to a workshop with special wiring for power tools might cause an appraiser to add to the average sale price. On the other hand, a backyard greenhouse might be seen as a specialty item that clutters the property and cost money to have removed.


It is also important to know that the assessed value of the property by county or municipal governments is researched by the appraiser, but these values usually have no real effect on fair market value. The assessed values are not based on professional appraisals and are also sometimes affected by laws governing the assessment of real property.


In selecting an appraiser, first make sure she is licensed by the state. Second, it is important to find someone who is knowledgeable of the local market and of the type of property being appraised. If there is business property, make sure the appraiser has experience or even specializes in that area. Similarly, if there is vacation property, make sure you hire someone in that market. An appraiser in San Francisco won’t know the business of vacation homes in Vail, Colorado.


Judy L. Burger’s experience as an aggressive family lawyer is paired with an extensive business background, an invaluable combination in contested divorce and separation proceedings. If you need the assistance of a lawyer who is not afraid to fight in court and who understands complicated financial issues, call her today at (415) 293-8314 or visit her online.