Dissipation of Assets - Divorce Encyclopedia

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Term Definition Dissipation of Assets - the wasting of marital assets through extravagant spending, gambling or excessive borrowing or fraudulent conveyance of a third party.

Application in Divorce In dealing with dissipation, courts balance the competing goals of preventing dishonest or reckless expenditure of marital funds against reasonable use of marital funds for legitimate purposes. According to one source, "[t]he immense body of case law dealing with [dissipation] is a tribute to both the dogged persistence of spouses who are determined to steal marital property for themselves, and the ingenuity of courts faced with stopping them."

In divorce, the assets during the happier times of the marriage.

Courts disagree the expenditure of marital funds for living expenses during a party doing the spending. That means he or she must prove that the funds were spent for a marital or proper purpose.

Courts look with disfavor on the dissipation of assets, and some consider it serious marital misconduct. Very often, when one evidence of dissipation and secretion.

In the context of divorce, dissipation of assets as well as their wasting through acts that are reckless and negligent and not necessarily intentional.

In divorce actions, sometimes courts issue pretrial injunctions to prevent dissipation before the fact, but this at the least requires that one party demonstrate that dissipation is likely to happen.

Very often dishonest spouses reduce the marital assets to the marital estate.

The Uniform Fraudulent Transfers Act (UFTA) and transfer happened without appropriate consideration and with fraudulent intent.

Very often when couples divorce courts must deal with dissipation after the fact via unequal distribution of the remaining marital assets in favor of the victim party, usually the woman.

In at least one case, a Michigan court added deterrence to the logic of the punitive distribution, holding that the amount of the unequal distribution can be greater than the amount dissipated (although an appeals decision reversed the lower but upheld the facts). A growing body of interest of deterrence.

The most common way of dealing with dissipation is to treat the dissipated assets by a problem gambler, who is addicted to the thrill in the risk of financial ruination.

Generally, a dissipated asset may be considered marital property if 1) the asset is lost; 2) the loss happened upon and after the breakdown of the marriage; 3) the guilty spouse to prove a valid marital purpose.

The expenditure of marital funds for a girlfriend or paramour can be classed as dissipation of the marital estate.

Gifts to children, particularly when the are larger than previous years, may be classed as dissipation, especially if they are made near the time of the marital breakup.

Loss can take many forms, including destruction (a California case where a spiteful husband threw his wife’s jewelry into the ocean); deliberate reduction of an asset’s fair market value; concealment; placement of an asset in a trust; allowing foreclosure of real estate.

Courts sometimes face cases where one accounts in her own name from the beginning of her marriage.

Expenditures or loss associated with a "valid marital purpose" are more problematic. No court has made a definite ruling of the meaning of this phrase, but valid marital purpose would be when one partner spends marital maintenance and payment of taxes on marital property. In general, the use of marital funds to attorney’s fees is not dissipation.

The payment of temporary spousal and classification of assets.

Courts increasingly hold that dissipation may also include recklessness without intent to harm the spouse or the martial estate. Courts uniformly include "excessive gambling" in this category of dissipation. Martial funds spent entertaining a paramour, with or without a reckless intent, are also dissipation.

Reckless expenditures, such as the loss of $56,000 in marital assets seized by the federal government upon the failure of the husband’s illegal drug business, are dissipation.

Like so much of divorce maneuvering, dissipation becomes darkly comic. In one 2004 Indiana case, a man weakened a claim of improper division.