Dissipation of assets can become a serious concern during divorce. Essentially, dissipation can occur when one spouse tries to spend, hide or waste marital property before it can be divided fairly. If you and your spouse are going your separate ways, guarding against this behavior may be necessary to better ensure a fair outcome and to protect your financial future, especially if your spouse has proven to be manipulative, highly territorial and/or vindictive.
Dissipation can take many forms. A spouse might drain a joint bank account, rack up debt on shared credit cards, transfer funds to friends or relatives or make large purchases for a new romantic partner. Sometimes, it is more subtle—such as selling property for less than it is worth or withdrawing retirement funds early to avoid dividing them.
What can be done?
If one party begins dissipating assets, it can leave the other at a disadvantage during property division. That is why taking early action is important.
The first step you’ll want to take involves monitoring all financial accounts closely. Make copies of bank statements, tax returns, credit card activity, investment records and any other financial documents you can access. Look for unusual activity, such as sudden withdrawals or transfers, new loans or spending patterns that deviate from the norm.
Next, speak with your legal team about seeking temporary orders from the court. These orders can prohibit both parties from selling, transferring or spending certain assets while the divorce is pending. Courts may also freeze accounts or require financial disclosures to prevent misconduct.
If dissipation has already occurred, it is still possible to seek justice. A judge can take this behavior into account when dividing assets. For example, if one spouse spent $20,000 on personal vacations or gifts without the other’s consent, the judge may award the other spouse a larger share of remaining marital property.
Finally, you’ll want to avoid retaliating. Taking similar actions or hiding your own assets can weaken your case and complicate the divorce process. Staying calm and documenting everything will give you and your legal team solid footing upon which to build a response to your spouse’s misconduct.