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Who Controls Marital Property During the Marriage?

Who Controls Marital Property During the Marriage?

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.