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Dissipation of Marital Asset Claims
What is a dissipation of marital assets claim?
In many divorces the parties simply go berserk. It is very common that one spouse may hide and/or spend down marital assets in the anticipation of a divorce. The typical allegations of dissipation include bad business decisions, spending marital monies to support a spouse's extended family, gambling debts, and spending money on extramarital affairs.
If a spouse extravagantly spends marital assets then this will only decrease the size of the marital asset. Therefore, the dependent spouse will ultimately receive a much smaller share of the marital assets. The critical issue in these types of scenarios is at what point does one spouse's extravagant spending considered to be dissipation.
In some divorce cases it is unfortunate that a spouse will "get away" with a marital dissipation claim. However, if you are busted for dissipating marital assets then I have seen many judges wipe out that person financially. The judges have a great deal of judicial discretion when it comes to dealing with claims of marital dissipation. The total amounts that a person dissipates often pales in comparison to the amount of equitable distribution that he will lose in the long run.
How does New Jersey law define dissipation?
The key case that defines what is dissipation is Kothari v. Kothari, 255 N.J. Super 500 (App. Div. 1992). Here, the Appellate Division defined dissipation as "where a spouse uses marital property for his or her own benefit and for a purpose unrelated to the marriage at a time when the marital relationship was in serious jeopardy."
What is and what is not considered the dissipation of marital assets?
How can a judge rule on a dissipation of assets case?
A court has a great deal of discretion in fashioning an equitable remedy in any divorce where there are serious claims of dissipation. N.J.S.A. 2A:34-23.1(l) authorized a court to consider "the contribution of each part to the .... dissipation .... in the amount of value of the marital property .... when determining the equitable distribution of the marital assets." See, Painter v. Painter, 65 N.J. 196 (1974); (Holding that a court can promptly take judicial action to remedy any fraudulent disposition of property in any divorce.)
The court must analyze several facts to determine if one spouse's spending is considered to be dissipation. The court will consider:
If there is a gross dissipation, then the court has the authority to allocate assets. Moreover, it can also disproportionally allocate any marital debt in the case divorce proceedings.
My husband ran up a $200,000 bill to the Borgata casino. How can the court allocate this debt in our divorce?
The court also has the authority to allocate any debt in the divorce case. Most likely the court will rule that the husband is solely responsible for debt to the Borgata. Illustrative is the case of Monte v. Monte, 212 N.J. Super. 557 (App. Div. 1996). Here, the Appellate Division held that, "a debt resulted because one spouse intentional dissipated marital assets then such intentional dissipation is no more than a fraud on the marital rights and the debt will not be charged to the other spouse." Therefore, the court will hold that your husband committed fraud upon the marriage by running up such a large gambling debt. Accordingly, the court will order your husband to pay for this debt out of his own assets and income.
My husband is a scheming demon and we are now getting a divorce. What steps can I take to prevent him from hiding and stealing all of our money?
If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.
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