Is There A Penalty For Misappropriation In A Family Law Action?

Misappropriation is the use of community property for purposes that do not benefit the community. Married people are in a confidential relationship with each other and have fiduciary duties to one another that are set out in the Family Code, Corporations Code, and in case law. Depending on the facts, a party may be charged with the loss to the community of the funds misappropriated, as well as penalized with harsher financial sanctions.

Misappropriation is the unauthorized use of community assets for one’s own purposes to the exclusion of the other spouse without benefit to the community. Misappropriation may exist in the following circumstances:

Family Law Infographic - Possible Violations • gifts of money to a girlfriend, boyfriend or another third party
• purchase of illegal drugs or illegal guns
• illegal gambling
• payments to prostitutes/escorts
• “waste” or disposal of community property
• gross negligence or reckless conduct relative to community assets or investments
• intentional misconduct relative to community assets
• knowingly violating the law to the detriment of the community

The following circumstances generally do not constitute a misappropriation or the breach of a fiduciary duty:

Family Law Infographic - No Violation • negligent wrongful misconduct
• legal gambling
• extravagant entertainment
• extravagant purchases
• unsuccessful business ventures or failed investments