Spouses have a fiduciary duty to disclose their finances to each other in divorce cases. This obligation is ongoing and requires that the parties update and augment their legal family law disclosure documents throughout the family court divorce process until judgment has been granted by the court. Failure to do so, even if the party believes it to be separate property, can result in a set-aside or reversal of the judgment and an award of the non-disclosed asset to the other party without offset.

California Family Code §721 characterizes the relationship between spouses as a fiduciary relationship and pursuant to Family Code §2100 et seq., the parties must make full, accurate and complete disclosure of all assets and liabilities to each other. The family law court wants to ensure that there is a fair division of the community property and that those assets and debts that exist at the date of separation are preserved and protected. Failure to do so could result in a set-aside or reversal of your case as evidenced in the well-known “lottery case,” the family law case law In Re Marriage of Rossi (2001) 90 Cal.App.4th 34. In this family law case, one party failed to disclose the $1.3 million winnings of a California lottery ticket, winnings that the party concealed from the other. The family law court found that the non-disclosure was deliberate and, despite the party’s contention that the winnings were separate property, the family law court awarded the non-disclosed asset in its entirety to the other party.

Family Code 721 –  Relation of Spouses   

(a) Subject to subdivision (b), either spouse may enter into any transaction with the other, or with any other person, respecting property, which either might if unmarried.

(b) Except as provided in Sections 143, 144, 146, 16040, 16047, and 21385 of the Probate Code, in transactions between themselves, spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. This confidential relationship is a fiduciary relationship subject to the same rights and duties of nonmarital business partners, as provided in Sections 16403, 16404, and 16503 of the Corporations Code, including, but not limited to, the following:

(1) Providing each spouse access at all times to any books kept regarding a transaction for the purposes of inspection and copying.

(2) Rendering upon request, true and full information of all things affecting any transaction that concerns the community property. Nothing in this section is intended to impose a duty for either spouse to keep detailed books and records of community property transactions.

(3) Accounting to the spouse, and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse that concerns the community property.