When fiduciary duties are breached between spouses or domestic partners, California’s Family Code provides a statutory remedy. But what happens when those breaches involve separate property, and the alleged misconduct occurred over a long period of time?
The recent California Court of Appeal decision in In re Marriage of Wiese (2024) 102 Cal.App.5th 917 provides clarity on the scope and limitations of Family Code section 1101 in such cases. Specifically, the court held that the tolling provision in Family Code section 1101(d)(2) applies only to community property claims, not separate property.
Wiese limits the timeframe for asserting breach of fiduciary duty claims based on separate property mismanagement and could have far-reaching implications for trust and probate litigation when claims are brought against or by a deceased spouse’s estate.
Wiese Overview: Separate Finances, Shared Complications
Jill and Grant Wiese were married for nearly 30 years before dissolving their marriage in 2016. Prior to marrying, they executed a premarital agreement (PMA) that kept their respective assets and earnings largely separate. The PMA required Grant, who entered the marriage with significant real estate wealth, to provide for the couple’s reasonable living expenses during the marriage.
Jill worked throughout the marriage as an independent agent for Grant’s real estate brokerage. Pursuant to a commission agreement between them, Jill was entitled to retain 100% of her commissions as separate property after deductions for business expenses and income taxes. However, during the dissolution proceedings, Jill alleged that Grant had wrongfully deducted excessive amounts from her commissions over the span of three decades. She claimed these actions diminished her separate property interests and constituted breaches of his fiduciary duties as a spouse.
Spouse’s Separate Property Claims Deemed Timely Under Family Code Section 1100
At trial, the Orange County Superior Court ruled in Jill’s favor, holding that her claims were timely under Family Code section 1101(d)(2), and awarded her $1.3 million. Both parties appealed.
No Tolling for Separate Property: Appellate Court Clarifies Scope of Family Code Section 1101
The Fourth District Court of Appeal reversed the trial court’s ruling, finding that the tolling provision in Family Code section 1101(d)(2) applies only to claims involving community property, not separate property.
Family Code section 1101(d)(2) provides that a claim can be brought without regard to the breach of fiduciary duty statute of limitations in California if filed in conjunction with an action for dissolution of marriage or legal separation. Subdivision (d)(2) further clarifies that this exemption from the statute of limitations also applies to an action under this section in conjunction with the death of a spouse.
However, the court held that this language does not extend to separate property claims. Claims concerning the mismanagement or impairment of a spouse’s separate property are not shielded by the tolling provision and remain subject to the four-year statute of limitations for breaches of fiduciary duty under Code of Civil Procedure section 343. In other words, the filing of a dissolution petition or the death of a spouse does not pause or reset the limitations clock for these types of claims.
Therefore, because Jill’s breach of fiduciary duty claims were based on the misappropriation of her separate property earnings — rather than any injury to community property — her claims were untimely. The appellate court reversed the $1.3 million award and held that the trial court had erred in applying Family Code section 1101(d)(2) to toll the statute of limitations.
Why the Breach of Fiduciary Duty Statute of Limitations Matters After a Spouse’s Death
While Wiese arose from a dissolution proceeding, its holding has ramifications in the context of trust and probate matters. Family Code section 1101 also allows claims to be brought against or by a deceased spouse’s estate for breach of fiduciary duty.
The ruling in Wiese sets a precedent that any claims against or by a decedent’s estate for fiduciary breaches involving separate property are similarly not subject to tolling. If fiduciary misconduct involving the separate property of a decedent or surviving spouse occurred long before death and outside the statutory four-year window, such claims may be time-barred, even if raised for the first time in a probate proceeding.
This limitation will be particularly relevant in probate disputes involving long-term marriages, premarital agreements, or blended families where the financial arrangements between spouses are complex, and the factual record may go back decades.
A careful statute of limitations analysis will need to be conducted when pursuing claims involving the handling of separate property assets — whether real estate, brokerage accounts, or business interests. Practitioners may also need to consider how Wiese aligns with other relevant case law, such as Yeh v. Li-Cheng Tai, which carved out a rare exception to the general one-year statute of limitations by allowing a surviving spouse additional time to bring a claim against a decedent’s estate.
Key Takeaways: What Spouses Should Know About the Breach of Fiduciary Duty Statute of Limitations
- Fiduciary duties still exists, but with limits. Spouses owe fiduciary duties to each other even with marital agreements in place. However, enforcing those duties with respect to separate property is subject to a strict four-year statute of limitations under CCP section 343.
- Tolling under Family Code section 1101 is limited. The tolling provision in Family Code section 1101(d)(2) applies only to community property claims. Separate property claims are not tolled by the filing of a dissolution petition or the occurrence of a spouse’s death.
- Probate claims may be narrower than expected. Wiese provides a new lens through which to evaluate breach of fiduciary duty claims. Not all financial wrongs committed by a spouse are remediable after death, especially where separate property is involved.
- Get legal help sooner rather than later. Wiese underscores the importance of timing when it comes to enforcing fiduciary duties involving separate property. While California law gives spouses strong legal protections, not all claims can be brought years after the fact — especially when they relate to separate property and arise after a spouse has died.
Still have questions about the breach of fiduciary duty statute of limitations in California?
The clock is ticking. If you suspect a breach of fiduciary duty involving separate property during marriage, it’s crucial to act quickly. The breach of fiduciary duty statute of limitations in California can time-bar your claim before you realize it.
The skilled probate attorneys at Keystone can help you stay on top of important deadlines, ensuring your claims remain enforceable. Contact our firm today to find out how we can help.
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The post Breach of Fiduciary Duty Statute of Limitations: How <i>Wiese</i> Limits Claims Involving Separate Property appeared first on Keystone Law.
