Property Settlement Agreements

By agreement between the spouses, the separate property of husband or wife may be converted into community property or vice versa at any time.  Although title to the property may remain of record in joint tenancy or in the name of one of the spouses, the change over may be made[i].  If possible, the intent of the parties to a contract should be ascertained from the language contained in their contract.  The contract is the best evidence of the parties’ intent, unless it contains absurdities or contradictions. Furthermore, determination of meaning and legal effect are questions of law to be decided by the court, where the contract is clear and unambiguous[ii].

A fiduciary relationship exists between the spouses throughout the marriage.  In some jusrisdictions, the relationship continues even after the spouses have separated, or one has filed a complaint for divorce.  In such cases, the fiduciary relationship ceases only when the marriage is dissolved.  This fiduciary duty extends to the parties’ negotiations leading to the formation of the property settlement agreement during marriage.  Moreover, it requires a disclosure by both parties of all information within their knowledge regarding the existence of community property and of pertinent facts necessary to arrive at a reasonable valuation of the property.  Each spouse is free to adopt a position favorable to himself or herself regarding the property’s valuation, its inclusion in the community, or other such issues. However, they are not free to resolve such issues unilaterally by concealing the very existence of particular items or amounts of property[iii.]

When the parties to a marriage are negotiating a property settlement, recognizing that their interests are adverse to one another and that they are dealing at arms length, neither spouse owes to the other the duty of disclosure which s/he would normally owe if their relationship remained a confidential one.  The confidential relationship of a husband and wife applies only in those circumstances where they are still living together[iv].  In some jurisdictions, when the wife sues for a separation of the property, she is entitled to an accounting from the husband for community income or property in his hands, and to reimbursement and retribution for any act done by him in fraud of her rights[v].

 [i] First Western Bank & Trust Co. v. Scott, 216 Cal. App. 2d 414 (Cal. App. 2d Dist. 1963)

[ii] Suchan v. Suchan, 106 Idaho 654 (Idaho 1984)

[iii] Bodine v. Bodine, 114 Idaho 163 (Idaho Ct. App. 1988)

[iv] Jeffries v. Jeffries, 434 N.W.2d 585 (S.D. 1989)

[v] Bender v. Pfaff, 282 U.S. 127 (U.S. 1930)


Inside Property Settlement Agreements