What No-Fault State Means in California: Details on Spouse Fiduciary Duty

When it comes to divorce, California is a “no fault” state which means that no matter the reason parties get a divorce, a spouse is NOT entitled to “damages” for things such as abandonment or adultery.  In fact, married couples in California can get divorced simply by having “irreconcilable differences” which basically means someone wants out of the marriage.

Now, bear in mind that just because California is a “no fault” state in terms of divorce, spouses still owe a “fiduciary duty” to one another which is the highest legal duty someone can have to someone else.  With this fiduciary duty owed to your spouse comes the right and obligation to be completely transparent with one another about the finances of the marriage.

iding money, incurring substantial debt or engaging in transactions that materially affect the marital finances without notifying the other spouse can subject a spouse to various penalties such as an unequal division of assets, the payment of the other spouse’s attorneys’ fees and even monetary penalties called sanctions.  The fiduciary duty owed to your spouse continues even after you separate until the time a judgment is entered which means the spouses are required to constantly update the other of any transaction, business, personal or otherwise, that could affect the marital estate.

Furthermore, spouses are required to notify and allow the other spouse the opportunity to engage in any transaction, business, personal or otherwise, that affects the marital estate such as buying and selling real property or a business opportunity.  A spouse’ failure to fully and accurately disclose anything that may materially impact the marital estate could result in the loss of the asset, payment of attorneys fees and/or monetary sanctions.

The moral of the story is to keep your spouse apprised of all financial issues, including financial opportunities, that affect the marital finances.