Is Community Property Liable for Debts from one Spouse's Criminal Acts or Misconduct?

When one spouse takes on a debt, who has to pay it? Is it the spouse who incurred the debt or signed for it? Or is it both spouses, because they are married? What if the debt or liability results from one spouse's misconduct, fraud or other crime?

In California, the answer often starts with one key law.

The Starting Point is Family Code Section 910

California Family Code section 910 says:

(a) Except as otherwise expressly provided by statute, the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.

(b) "During marriage" for purposes of this section does not include the period after the date of separation, as defined in Section 70, and before a judgment of dissolution of marriage or legal separation of the parties.

In simple terms, this means if a spouse incurs a debt during the marriage, the community estate is generally on the hook. It does not matter which spouse signed for the debt. It does not matter who managed the money. After the date of separation, new debts are usually not community debts.

That sounds simple. But real life is rarely simple.

The hard questions come when one spouse creates a debt that does not benefit the community (marriage/marital estate) at all.

What Is the "Community Estate"?

Before we go deeper, we need to define a key term.

What Is Community Property?

In California, most money earned and assets acquired during marriage is community property.

Think of it like this. If one spouse earns a paycheck during marriage, that paycheck usually belongs to both spouses. If that paycheck is used to buy a car, that car usually belongs to both spouses. There are exceptions but that is the general rule.

The "community estate" is the total pool of those shared assets and debts.

What Is Separate Property?

Separate property is usually property owned before marriage. Gifts or inheritances received by one spouse alone. Property earned or acquired after the date of separation.

Separate property generally belongs to only one spouse.

With those basics in mind, let's turn to the question of what happens when one spouse causes a debt that clearly seems unfair to the other?

The General Rule: The Community Pays

Under section 910, the community estate is liable for debts incurred during marriage. Even if only one spouse signed for the debt, the community estate can still be responsible.

But courts have struggled and changed the general rule when the debt comes from bad behavior, especially when the other spouse had no idea.

When the Debt Comes from Misconduct

There are cases where one spouse:

• Commits fraud
• Embezzles money
• Acts negligently in a business role
• Gets sued for wrongful conduct

Courts have had to decide whether the community estate should share in the fallout.

When the Community Received the Benefit

Published appellate cases have dealt with situations where a spouse committed embezzlement over several years. The stolen funds were brought into the marriage and used for family expenses. The appellate court made some important distinctions:

• The spouse who committed the wrongdoing had to pay for her own criminal defense fees.
• That spouse was also responsible for tax penalties and related costs that arose from her illegal acts.
• But when it came to repaying the settlement amount, the court recognized that the community had received and used the stolen money.

The reasoning was practical. If the community enjoyed the money while it lasted, it cannot later pretend it never happened.

When the Activity Benefited the Marriage

In another published case, a spouse served as a corporate director and was later sued for alleged misconduct. Even if some of the conduct was negligent or intentional, the court focused on this question of whether the spouse's activity part of earning money for the family?

The spouse's board service generated income that supported the marriage. Because the activity itself benefited the community, the resulting settlement and legal defense costs were treated as community obligations.

When There Was No Benefit to the Community

On the other hand, there is a strong argument an innocent spouse should not automatically share in losses from conduct that brought no benefit to the marriage.

If one spouse engages in intentional wrongdoing, accepts the risk of being caught, and the other spouse had no knowledge and no way to prevent it, a courts may assign certain debts solely to the wrongdoing spouse.

For example, legal defense fees for criminal acts are often treated as that spouse's responsibility, especially when the conduct was personal and secret.

Gambling Debts

Now let's turn to more common scenarios.

What about gambling?

Imagine one spouse secretly spends $150,000 of community funds at casinos over several years.

Is that a community debt?

Argument That It Is Community Debt

Under section 910, the debt was incurred during marriage. That alone creates a presumption that the community is liable.

Also, some might argue that gambling is a personal choice, like any other spending decision. People spend money on hobbies all the time. Some hobbies are expensive. Some are risky. The law does not usually police "bad" spending choices.

Courts are often cautious about becoming referees of marital spending.

Argument That It Is the Spouse's Separate Debt

On the other hand, gambling losses often provide no lasting benefit to the community.

If one spouse hid the gambling, ignored the other spouse's objections, and drained joint accounts without consent, a strong argument can be made that this was a breach of fiduciary duty.

Spouses owe each other the highest duty of good faith and fair dealing when managing community property. That means no secret withdrawals, no hidden accounts, and no reckless depletion of assets.

If the gambling was excessive, secretive, and harmful, the innocent spouse may seek reimbursement to the community, an unequal division of property, or an order assigning that debt solely to the gambling spouse.

The more deceptive and extreme the conduct, the stronger this argument becomes.

Extramarital Affairs

Few topics are more emotionally charged. What if one spouse spends large sums of money on an extramarital affair and that spending may include:

• Hotels
• Gifts
• Travel
• Rent for another person
• Secret credit cards used for an affair

Argument That It Is Community Debt

Technically, money spent during marriage is still community money. Some courts may view these expenses as part of the general spending that happens in a marriage.

The law does not typically punish moral failings. California is a no-fault divorce state. So simply proving an affair does not automatically mean the spending spouse must repay every dollar.

Argument That the Community Is Entitled to Reimbursement

But there is a strong counterargument. When one spouse spends community funds on an affair:

• The spending is secret.
• It does not benefit the marriage.
• It often occurs over the other spouse's objection.
• It involves intentional deception.

In that situation, the innocent spouse can argue that the spending was a breach of fiduciary duty and amounted to an improper dissipation of community assets.

In plain English, that means one spouse burned through shared money for personal reasons that harmed the marriage.

Courts have the power to order reimbursement in cases of misappropriation or breach of duty. The greater the amount, the stronger the claim.

It is difficult to imagine that large, secret expenditures on an affair would fairly be considered a community obligation, especially when that money represented half of the other spouse's earnings.

Still, courts will look closely at the amount spent, whether it was hidden, whether it materially harmed the community, and the overall financial picture.

Drug Use and Other Addictions

Addictions raise similar issues. Suppose one spouse spends tens of thousands of dollars on illegal drugs, alcohol, or other destructive behavior.

The Community Debt Argument

Again, the baseline rule applies. The debt was incurred during marriage. The funds were community funds.

Courts are cautious about labeling one spouse's lifestyle choices as separate obligations, especially if there is no clear paper trail.

The Separate Obligation Argument

But addiction often involves:

• Secrecy
• Lying
• Draining accounts
• Selling assets
• Taking out loans without consent

If the spending is substantial and clearly harms the community estate, courts may find that the addicted spouse breached fiduciary duties.

The Key Factors Courts Consider

There is no automatic formula. Courts tend to look at:

1. Was There a Benefit to the Community?
2. Was the Conduct Intentional or Reckless?
3. Was There Secrecy or Deception?
4. How Large Was the Amount?

Spending $500 on a bad decision is different from draining $200,000 from retirement accounts.

Courts will likely care about material impact.

5. Did the Other Spouse Object?

If one spouse clearly objected and the other continued anyway, that may strengthen the argument for reimbursement.

It Is Not Always a Clear Cut Answer

While the general rule says the community estate is liable for debts incurred during marriage, real life forces courts to draw lines.

After all, community property means each spouse owns half. Spending community funds is not just spending your own money. It is spending your spouse's money too.

That said, courts must balance fairness with the broad language of section 910. They cannot simply rewrite the statute. Each case turns on its specific facts.

The nature of the conduct, the amount involved, the benefit or lack of benefit to the community, and the overall circumstances all matter.

In some cases, the community will share the burden. In others, the court may shift the loss to the spouse who caused it.