What to Do if You Suspect Wasteful Dissipation of Marital Assets

Wasteful dissipation of marital assets is a form of economic wrongdoing that occurs not only in high-asset divorces. In these cases, the goal of the dissipating spouse is to reduce the other spouse’s share of property that would be awarded to them as part of a divorce. However, when wrongful dissipation is proven, the court will typically hold the offending spouse accountable for their wrongful acts by awarding a larger share of the marital property to the innocent spouse. It’s vital to understand how wasteful dissipation is defined — and what you can do if you suspect it is an issue in your case.

What is Wasteful Dissipation of Marital Assets?

Wasteful dissipation of marital assets refers to a form of spousal misconduct involving gambling, excessive spending, unnecessary borrowing, or other deliberate acts that reduce the value of the marital estate. Notably, expenditures or losses associated with routine living expenses or other valid family or marital purposes, including paying for divorce legal representation, do not qualify as wasteful dissipation. To constitute wasteful dissipation, the spending must be frivolous and unusual.

Some common examples of wasteful dissipation during or just before divorce can include:

• Making luxury purchases that do not benefit the marriage
• Spending marital assets on gifts for a paramour
• Wasting money through gambling, alcohol, or drug addiction
• Selling marital assets for an amount significantly less than fair market value
• Making extravagant gifts to friends or family members
• Recklessly investing marital assets
• Transferring business interests or other assets to siblings, parents, or adult children

Dissipation may also include concealment or destruction of marital assets — as well as the conveyance of marital property through careless acts. For instance, a spouse may attempt to reduce the marital estate by transferring assets to a third party.

Steps to Take if You Suspect Wasteful Dissipation

Dissipation of marital assets can be challenging to prove during divorce. It often takes a forensic accountant to conduct a thorough analysis of the offending spouse’s financial records. Evidence that may show wasteful dissipation can include bank statements, credit card bills, receipts, and any other financial documents. Notably, if you suspect your spouse has dissipated marital assets, there are several things you can do to help build your case.

Carefully review statements from any joint accounts and credit cards. Identify recurring expenses, unusual transactions, or large purchases. You should also collect any receipts or records of cash withdrawals and note any patterns. Document your family budget to demonstrate your spouse’s change in spending habits and impulse purchases. If you do not have access to certain financial information that may show wasteful dissipation, the discovery process during divorce can be used to help you obtain these documents.

It’s important to consider the expense that may be associated with investigating the dissipation, compared with your potential gain. While a court may adjust a property division award if it has been determined that a spouse committed financial misconduct, the costs of litigation might outweigh the recovery if the dissipation was not substantial. It’s best to discuss the pros and cons of pursuing a claim for dissipation of marital assets with a skillful divorce attorney.

What Remedies are Available if Your Spouse Dissipated Marital Assets?

If a judge finds that a spouse dissipated marital assets, several remedies may be available to the innocent spouse. In most situations, the court would compensate the spouse by granting them a larger portion of the marital assets. Generally, dissipated marital assets are still considered marital property that are available for equitable distribution if:

• The asset is lost
• The loss occurred after the breakdown of the marriage
• The offending spouse controlled the marital asset at the time it was dissipated
• The loss of the asset was not incidental to a legitimate marital purpose

If the remaining marital assets are not sufficient, a judge may order the offending spouse to pay restitution to the innocent spouse. The court may also order a rescission in some situations where an asset was fraudulently conveyed — this would restore the asset to the marital estate. In the event the dissipation of marital assets is ongoing, the court may issue an injunction that prevents the spouse from squandering marital funds any further.

It’s crucial to take steps to protect your assets before the divorce process begins, as well as during the proceedings if you believe your spouse may be depleting marital assets. Consult with a divorce attorney who can best advise you regarding the appropriate strategies you should take to safeguard your finances.

Contact an Experienced Maryland Divorce and Family Law Attorney

Wasteful dissipation of marital assets can often make divorce proceedings more complex. In these cases, it’s essential to have an experienced divorce lawyer by your side who can protect your rights and fight for a fair outcome. At Strickler, Platnik & Hatfield, we provide compassionate counsel and aggressive advocacy to our clients for divorce and a wide range of family law matters. To learn more about how we can assist you, contact Strickler, Platnick & Hatfield to schedule a consultation.