When a marriage ends, both spouses are generally entitled to an equal division of their community property. Unfortunately, some spouses attempt to hide assets, transfer money, conceal income, or otherwise deprive the other spouse of their rightful share of the marital estate.
California law takes the concealment and misappropriation of community assets seriously.
A spouse who improperly takes, hides, or transfers community property may be required to reimburse the other spouse, pay attorney’s fees, or, in particularly serious cases, forfeit their entire interest in the concealed or transferred asset.
At Smith Law Group, we are well versed in the importance of identifying, protecting, and recovering community assets during divorce proceedings.
What Constitutes Theft or Concealment of Community Assets?
In California, community property generally includes income, assets, and property acquired by either spouse during the marriage, subject to certain exceptions.
Examples of improper conduct may include:
- Secretly Withdrawing Funds from Banks
- Transferring Property to Friends/Relatives
- Selling Property without Disclosure
- Failing to Disclose Community Assets
- Hiding Cash or other Financial Assets
- Concealing Income or Business Interests
- Understating/Diminishing Values of Assets
- Spending during Marriage for Personal Purposes
Not every withdrawal, expenditure, or transfer of community property constitutes wrongdoing. However, when a spouse intentionally conceals or misappropriates assets to deprive the other spouse of their rightful interest, California law provides significant remedies.
Spouses Have a Fiduciary Duty to One Another
Under California Family Code §§ 721 and 1100, spouses owe each other fiduciary duties concerning both the management and the control of community property.
These obligations include duties of honesty, fair dealing, and disclosure of material financial information both during the marriage, and upon divorce. Spouses are required to disclose the existence and value of community assets and provide access to relevant financial records. These obligations generally continue until all the community assets have been divided.
A spouse who intentionally hides property or improperly transfers community assets may be found to have breached these fiduciary duties.
CA Family Code § 1101: Remedies for Concealed or Misappropriated Assets
California Family Code § 1101 provides important remedies when one spouse breaches a fiduciary duty in a manner that impairs the other spouse’s interest in community property.
Recovery of Community Assets — Family Code § 1101(g)
Under Family Code § 1101(g), a spouse who has been harmed by a breach of fiduciary duty may be entitled to an award of 50% of the undisclosed or improperly transferred asset, or an amount equal to 50% of its value, together with attorney’s fees and court costs.
This remedy helps ensure that the innocent spouse receives the community property interest to which they are entitled.
The 100% Penalty — Family Code § 1101(h)
One of the most powerful remedies available under California divorce law is found in Family Code § 1101(h).
When a spouse’s breach of fiduciary duty involves fraud within the meaning of California Civil Code §3294, the court may award the innocent spouse 100% of the undisclosed or improperly transferred community asset, or its equivalent value.
For example, suppose one spouse deliberately conceals a community investment account containing $200,000 to prevent the other spouse from receiving any portion of it. Ordinarily, each spouse would be entitled to $100,000 of that community asset. If the court determines that the concealment constitutes a breach of fiduciary duty involving fraud, oppression, or malice, the innocent spouse may be awarded the entire $200,000, rather than only their usual one-half share.
The 100% remedy is not automatic in every case involving missing money or undisclosed property. The facts and evidence must establish the required level of misconduct, and an attorney experienced in this particular field is generally well versed in those requirements.
What Should You Do If You Suspect Your Spouse Is Hiding Assets?
If you believe your spouse is concealing or improperly spending community property, it is important to act promptly. Preserve available financial records, including bank statements, tax returns, investment statements, business records, and communications concerning financial transactions. An experienced family law attorney can evaluate whether formal discovery, subpoenas, forensic accounting, or court intervention may be necessary to identify and protect the missing assets.
Do not assume that money or property is permanently lost simply because your spouse has transferred, spent, or concealed it. Depending on the circumstances, California law may provide a means to recover your share or obtain additional relief.
Protecting Your Financial Interests During Divorce
The division of community property should be based on complete and accurate financial information. When one spouse conceals assets or improperly diverts community funds, the consequences can affect the fairness of the entire divorce settlement.
At Smith Law Group, we represent clients in California divorce matters involving complex property division, hidden assets, financial misconduct, and breaches of fiduciary duty. We are experienced in finding stolen or hidden assets, and recovering as much as possible for our clients in this situation.
If you suspect your spouse has concealed, transferred, or misappropriated community property, our office can help you evaluate your legal options and pursue appropriate remedies under California law.
Contact Smith Law Group to schedule a consultation and learn more about protecting your rights and financial interests during divorce.
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