The concept of a fiduciary relationship is usually considered in the business realm. For instance, a financial broker owes a fiduciary duty to their client. Many New Jersey residents don’t realize that state law extends that duty to married couples. It’s a duty that lasts through the divorce process; failing it can have consequences.
What is a fiduciary duty?
A fiduciary is someone who holds the highest level of responsibility toward the assets of another. They must treat those assets carefully, with the asset owner’s best interests in mind. The fiduciary must act in good faith and deal fairly with the principal.
It is a duty that each spouse in a marriage owes to the other, and both spouses are considered fiduciary. However, this relationship does not end as soon as the couple separates. It continues until the divorce is final and, in some cases, beyond that point. If, for instance, the division of property lasts beyond the actual divorce, so too can the spousal fiduciary duty.
How does the duty impact divorce?
As part of the division of property during a divorce, each spouse must fully disclose all assets and liabilities. Failing to do so can lead to a breach of the spouse’s fiduciary duty. New Jersey Court Rule 4:50-1 allows an aggrieved spouse to file a motion to reopen a divorce proceeding if it is discovered that the breach resulted in fraud which impacted the initial divorce settlement.
The duty also requires spouses to care for marital assets appropriately until property division is complete. Acting in a manner that is unreasonably risky with marital funds or wasteful of the marital property could run afoul of the fiduciary relationship imposed by law.