It’s important not to make financial mistakes during a divorce. One piece of advice that people will sometimes give is not to spend any money while going through the divorce process. They warn that you can be accused of fraud or asset dissipation, as your spouse may say that you are trying to keep them from getting the money they deserve.
But this is not necessarily true. What you want to avoid is lavish spending. Don’t start spending excessively. Don’t buy items that are out of the norm. Don’t spend on things that are not necessities or daily staples.
What is the dissipation of assets?
To understand the issue, it’s necessary to consider why someone would dissipate assets. Usually, the reason is that they are trying to keep those assets out of property division.
For example, say that two people have $100,000 that they will be splitting in half during their divorce. If one person spends $50,000 quickly before the divorce, then the couple splits up the remaining $50,000 – so that they each get $25,000. Dissipating assets means spending them down, and it is similar to attempting to hide assets during a divorce.
But this doesn’t mean that you can’t spend money at all. Divorce can take months. You still have to do things like paying the mortgage, buying food, paying the electric bills, paying the phone bill and much more. As long as your spending is reasonable and within normal limits, it is unlikely that it would be viewed as unethical dissipation.
That said, the financial side of a divorce can get very complicated. Be sure you understand all of your legal options.