How Does Wasteful Dissipation of Marital Assets Impact Property Division?
Wasteful dissipation occurs when a spouse wastes or intentionally fails to protect marital assets. While this sounds pretty straightforward and easy to define, proving wasteful dissipation of marital assets in a family court can get complicated and normally requires experienced legal representation.
For example, judges won't consider alleged wasteful dissipation by your spouse unless it's unusual spending or something outside average expenditures
Suppose your spouse has a history of frivolous spending throughout the marriage, and you now claim it's wasteful. In that case, you should not expect the court to rule in your favor.
Wasteful dissipation can occur in many ways. For example, a spouse might excessively spend marital assets in anticipation of a divorce to keep the other from receiving an equitable share. In other words, it is often spiteful and intentional and not uncommon in hotly contested divorces.
Some common examples of wasteful dissipation in a divorce case include a frivolous waste of marital assets, excessive spending on shopping, drugs, alcohol, extramarital affair, or gambling. It could also include deliberately failing to protect community assets.
Is Your Spouse's Spending Considered Wasteful?
As you go through the California divorce proceedings, you might encounter the term “wasteful dissipation.”
Simply put, it consists of spending excessive marital money or assets right before a divorce. It's unethical conduct by a spouse to attempt to spend marital assets while they can.
Wasteful dissipation occurs when one spouse decides to wastefully spend marital assets or fails to protect marital assets in the anticipation of a divorce.
Suppose a spouse wasted a significant amount of assets. In that case, you might be entitled to a larger share of marital assets during the property division, but this does not apply to a minimal wasted amount.
Of note is that California has no exact definition for wasteful dissipation. Instead, there are numerous factors the family court will consider before determining whether a spouse's behavior would be considered wasteful, including the following:
- A spouse's intent while spending the marital money;
- The amount of the marital assets that were spent;
- If the spending only benefited one spouse;
- Whether the spouse attempted to hide their spending;
- Impact the spending had on the family;
- Financial situation of each spouse.
What Are Some Examples of Wasteful Dissipation of Marital Assets?
There are numerous examples of how a spouse can wastefully dissipate marital assets, such as the following:
- Misusing or diverting a significant amount of marital funds;
- Large purchases just before filing for divorce;
- Intentionally overspending marital money;
- Emptying the joint bank accounts;
- Depositing marital money into a separate bank account;
- Maxing out sending limits on all the credit cards;
- Transferring money or property to a relative;
- Spending an excessive amount of money during an affair;
- Excessive gift-giving or shopping sprees;
- Excessive vacations or traveling;
- Purchasing a new home during divorce proceedings;
- Excessive gambling or sports betting;
- Deliberately making poor investments;
- Concealing or hiding marital assets;
- Failing to protect marital assets;
- Allowing a marital home to go into foreclosure;
- Fraudulently conveying property;
- Spending a lot of money on alcohol and recreational drugs;
- Making unusually considerable donations to charities.
It can be challenging to prove wasteful dissipation in court, so you must retain experienced legal representation to deal with this issue.
Perhaps a spouse knows early on a divorce is inevitable and starts selling community property for less than its value. Maybe they go on a sudden shopping spree or buy a new car in their name only.
California family courts will usually consider this type of spousal behavior as financial misconduct, which can impact their decisions on dividing property between spouses.
How Can You Prove Wasteful Dissipation?
To prove that your spouse's spending is dissipation, the family law court must see precisely when the spending occurred.
Suppose it happened the moment that you filed for divorce. In that case, this could be considered wasteful dissipation. However, on the flip side, if your spouse spent money frivolously throughout the marriage, then this would not be considered dissipation.
Further, as noted, the money will need to be substantial. The judge will also examine if the spending habits were unusual and frivolous.
To support a claim for financial misconduct, a spouse must prove that the number of assets wasted, spent, or transferred was unusual, frivolous, and didn't benefit the marriage.
Suppose an intentional excessive spending spree occurred right after the spouse was served with divorce papers. In that case, this could be considered valid evidence of the wasteful dissipation of marital assets.
There are common red flags that show marital assets are being dissipated. Some of the accounts and documentation that are typically reviewed while investigating dissipation claims include the following:
- Bank account statements;
- Credit card statements;
- Retirement account statements;
- Investment accounts;
- Tax documents and filings.
This is crucial to proving a dissipation of marital assets claims, investigating and tracking assets, and seeking evidence on when and how excess occurred.
A restraining order is usually related to domestic violence but can also be used for financial issues in a California divorce. For example, during the divorce process, restraining orders will go into effect immediately as part of the divorce summons served on your spouse.
How Can a Family Law Lawyer Help You?
If your spouse has accused you of wastefully dissipating marital assets, you must address the issue as soon as possible. But, on the other hand, perhaps we can argue that you made no such attempt.
You'll need to consult an experienced family law attorney to discuss how to defend yourself from these claims.
On the other side, if you have valid reasons to believe your spouse wastefully dissipated marital assets, you need to speak with a lawyer who has dealt with dissipation cases.
To prove wasteful dissipation by your spouse, you will generally have to examine all your financial records. If you can prove they deliberately misused marital assets, then the documentation of their financial misconduct might impact the property division in your divorce.
The judge might use the total value of wasted property to determine how to split your belongings. The divorce process can become more complex if you believe your spouse is unlawfully spending your assets.
Furman & Zavatsky are Los Angeles divorce and family law lawyers that provide legal representation across Southern California. Contact us for a free case consultation via phone or the contact form.