Fiduciary Duties Flashcards
Fiduciary Duties of Spouses
Each spouse owes one another a duty to act in the highest good faith and fair dealing in regard to the management and control of CP.
Includes:
1) Duty to Disclose
2) Duty to Account
3) Duty to Obtain Consent
What is the duty to disclose?
The duty to disclose states that the manager of community property is required to make full disclosure to the non-managing spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest and debts for which the community is or may be liable.
What is the duty to account?
The duty to account states that each spouse must provide access to all records and assets and debts to the community upon another spouses’ request.
What is the duty to obtain consent?
The duty to obtain consent requires that the managing spouse to obtain the consent of the non-managing spouse when
1) Making gifts,
2) Conveying or encumbering property,
3) Disposing of business property; or
4) Entering into leases of more than one year.
What are the remedies for a managing spouse’s breach of duty?
Results in the impairment of the non-managing spouse’s present undivided one-half interest in the community estate. Remedies:
1) Accounting
2) Adding name onto title of property
3) Greater CP share at dissolution
4) Attorney’s Fees and Costs
What are the elements of obtaining a remedy against a breaching spouse?
1) Requires proof of deliberate misappropriation or grossly negligent or reckless conduct.
2) Action must be brought within three years from date spouse had knowledge of breach.
Equal Management and Control
Each spouse has equal management and control over all CP.
This means that, as apart of the spouse’s fiduciary duties, both spouses must participate in decisions regarding major personal property transaction.
When does a spouse **improperly gift or dispose* of personal CP to a third party?
1) Spouse gives personal CP (furniture, furnishings) for less than fair and reasonable value
2) Without spouses’ **written consent
What is a harmed spouse’s remedies following an improper gift/disposition to a third party?
1) Ratify or approve of the gift
2) Revoke the gift and sue to recover all property
With an improper uniltateral gift of real property, how long does a harmed house have to file an avoid?
One year
Real Property Sold to a Third Party
If the third party purchaser purchased the real property in good faith (didn’t know of marriage, there is a presumption that the transfer was valid.
If invalid, spouse will refund the third party.
If valid, spouse will still be required to share profits of sale.
ESSAY TIP: When a spouse makes a purchase of real property with CP funds, do they need to tell the other spouse?
Yes! Because each spouse has an equal right to management and control of CP.
