Divorce 101 - What is Misappropriation?

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Did your spouse misappropriate community property funds under the California Family Code?

Misappropriation can have many meanings.  When the going gets tough in a divorce, spouses often accuse one another of misappropriation.  However, the California Family Code defines misappropriation differently than the Webster's dictionary or Encyclopedia Britannica. 

 Dictionary definition of  misappropriate is to appropriate wrongly as by theft or embezzlement.

The California Family Code defines misappropriation as a breach of a party’s fiduciary duty to the other party.

Misappropriation and the breach of a fiduciary duty owed to the other party may exist in the following circumstances:

  • • gifts of money to a girlfriend, boyfriend, or other 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 community assets

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

  •  negligent wrongful misconduct
  • legal gambling
  • extravagant entertainment
  • extravagant purchases
  • unsuccessful business ventures or failed investments

Therefore, when making an accusation of misappropriation, one should have concrete evidence to prove that their partner engaged in activities known to constitute actual misappropriation under the California Family Code.