Financial Disclosure in Tennessee Divorce
Shakespeare penned Juliet’s famous line “parting is such sweet sorrow.” Divorce could often be described in a similar fashion. Couples approaching a divorce, or finding themselves thrust into the thick of it, likely have conflicted emotions on the paths opening up ahead: as well as the doors closing behind them. But one thing that is important to remember is that as you go through the divorce journey, you are still bound by certain duties to your spouse: as are they to you. Regardless of what other vows may have been broken, throughout the course of a marriage and through the divorce process, spouses have a legal duty and obligation to honor a fiduciary duty to one another.
But what does this mean? What does a fiduciary duty entail? What are the consequences for breaching your fiduciary duty to your spouse? Well, no spoilers, but a breaching spouse could find themselves waving goodbye to some valuable assets (a sorrowful parting, indeed).
What is Fiduciary Duty to Spouse in Tennessee?
Tennessee Family Code Section 721 defines the fiduciary duty between two spouses as a confidential relationship where both spouses are required to treat each other with good faith and fair dealing. This means that if one spouse lies to the other about their finances, it could be considered fraudulent. Tennessee spouses owe one another the respect of honest, fair dealing. This means that if a person tries to conceal funds, wastes or improperly manages assets, opens secret bank accounts and does not account for money going into that account, etc., they may very well be found guilty of breaching their spousal fiduciary duty.
How Breach of Fiduciary Duty comes up in Divorce
In a Tennessee divorce each person is required to disclose the entirety of their financial situation. This includes inventorying assets, listing liabilities, showing proof of income, etc. Separate property is notable, because although it is not subject to division in a Tennessee divorce, spouses are still required to disclose separate property as part of the divorce discovery process.
Depending on the specifics at play in a case, the failure to disclose the required financial information could result in court-ordered penalties such as:
- Holding the offending party in contempt of court
- Prosecution for perjury
- Court-imposed sanctions (such as an order to pay your spouse’s attorney’s fees, since they had to go through extra work to uncover information that should have been given.)
- The offending party could lose their interest in the asset at issue. This means that instead of receiving the fair division of the asset that would have come their way if there had been no breach, the offending party, instead, loses all interest/ownership in the asset.
Case Example of Breach of Fiduciary Duty – And Consequences
In re Marriage of Rossi (2001) 90 Cal. App. 4th 34 tells the unfortunate tale of a wife who won the lottery in a pool at work. It seems counter-intuitive, does it not, that an unfortunate, cautionary tale is being told about a woman who won the lottery?
Well, in this case, the wife’s share of lottery winnings was 1,336,000. After she won the lottery she filed to divorce her husband. She did not tell her husband that she won this money during the course of the marriage, nor did she include the lottery winnings in her divorce financial disclosure documents. Two years after the divorce, the ex-husband learned of the lottery winnings and sued the ex-wife in a post-judgment action. The court ruled in the ex-husband’s favor and awarded 100% of the lottery winnings to him.
Another key point to take from this case is the fact that the divorce decree is not a “finish line” for breach of fiduciary duty issues. If a breach occurred, even if it takes years to uncover after a divorce settlement is finalized, the wronged party can take the issue to court.
Contact Fort, Holloway & Rogers
Marriage is complicated. Divorce can be even more so. Contact the experienced Franklin divorce attorneys at Fort, Holloway & Rogers for advice on how to properly plan and navigate through your own divorce case.
Sources:
natlawreview.com/article/court-appeals-affirmed-findings-breach-fiduciary-duty-against-wife-divorce
nydailynews.com/2024/04/11/channing-tatum-jenna-dewan-divorce-trial-testimony-financial-disputes/
