Financial misconduct can have a major impact on the outcome of divorce proceedings. People who have enjoyed a comfortable standard of living and acquired valuable property have more to lose when they divorce. Not only do they have more property to divide, but there are more opportunities for a spouse to engage in inappropriate behavior. Some spouses try to hide assets from the courts during divorce so that they don’t have to divide them. Others may engage in acts of dissipation.
They attempt to reduce the value of the marital estate so that they share less with their spouses. In scenarios where dissipation occurs, one spouse may be able to hold the other accountable for the economic consequences of their misconduct.
How do spouses dissipate marital property?
Dissipation is the destruction or waste of marital assets. It can involve using resources for a purpose that damages the marital relationship or outright destroying marital property. Some people dissipate marital assets by ruining or throwing away property that belongs to a spouse. Others sell high-value assets for less than the fair market value or give them away to people.
Dissipation can also look like spending an inappropriate amount of money either directly with a debit card or by accruing unnecessary debt. People dissipate marital property when they waste marital money on an extramarital affair or accrue debt while committing acts of infidelity.
What impact does dissipation have?
Obviously, dissipation deprives one spouse of income or assets that they should be able to share in a divorce. Other times, dissipation can increase the debts that the spouses have to divide, creating an unfair financial burden on one spouse.
Left unchecked, dissipation can result in an unfair and imbalanced property division decree. The spouse who wasted property deprives the other of assets that they deserve or makes them share responsibility for debts that they should not have to cover.
People can detect and quantify dissipation by conducting a thorough financial review and possibly bringing in a forensic accountant if necessary. Provided that there is evidence of the dissipation, it may be possible to ask the courts to factor in the value of dissipated assets when dividing marital property. One spouse can also ask the courts to exclude certain financial responsibilities from the marital estate.
Recognizing actionable forms of financial misconduct can help people prepare for property division proceedings when they divorce. Dissipation of marital property can complicate a divorce and alter the outcome of property distribution. Handled appropriately, this scenario does not need to lead to an unfavorable outcome for an innocent spouse.