When a relationship becomes unstable and one of the parties becomes driven by greed, spite or anger, they start removing marital property before divorce.

Removing or dissipating marital property occurs when one spouse takes action to conceal, waste, destroy or use up marital property before or during the divorce process. In this article, we will discuss how to remove marital property before the divorce, protect it during the divorce, and finally, what happens after dissipating it.

What Is Included in Marital Property?

Marital property includes all real estate and other properties the couple bought or acquired during their marriage. Marital properties may include houses, investment properties, cars, boats, artwork, jewelry or furniture that either spouse has acquired as separate property.

Generally, couples who agree to separate peacefully after ending their relationships are able to work together to come to a fair and equitable solution to divide their properties. For other divorcing couples, however, separation can become a long and drawn-out battle over every single penny.

How to Remove Marital Property Before Divorce

A lot of times, a husband or a wife tends to destroy or sell valuable marital property before a divorce to prevent the other spouse from getting their fair share of it during their divorce settlement. In high-income households, where one of the spouses is dependent on the other, the working spouse feels deserving of all the assets. Hence, they prefer to get rid of it rather than share it with the other person.

A spouse can dissipate marital property by removing items from the house or, in other cases, from the innocent spouse’s business so that they have no access to the property during and after the divorce. The spouse can also drain the bank accounts or sell the marital or business property and hide the proceeds.

In addition to your intuition, here are some of the red flags you should look for if you think your spouse might be dissipating your marital assets:

  • A spouse is secretive or controlling when it comes to the family’s finances
  • Money is spent on a relationship with a third-party
  • Taking impulsive vacations
  • Significant cash withdrawals
  • Large “gifts” to friends or family that the spouse can later collect back
  • Gambling
  • Unusual or unrecognizable transactions on credit card or bank account statements
  • Drug addiction
  • Spending down cash balances in a business

Protecting Assets in A Divorce

When one of the spouses is out for revenge or determined to win the battle at all costs, the other spouse should be protecting assets during divorce.

So, what can you do if you suspect that your husband or wife is selling off marital property or dissipating marital assets?

  • Protect your marital assets before the divorce situation begins. If possible, remove items of personal property from the house and bring them to a safe location before informing your partner that you are filing for divorce or when you start to feel that your relationship has become volatile. This process is considerably easier than recovering the possessions later.
  • Open a separate bank account. If you do not already have a separate account, open one and transfer your money to it. However, be careful not to remove more than your fair share of marital property. If not, the court might accuse you of the dissipation of assets.
  • Get a protective order for property. If you were unable to protect your property and safeguard your assets immediately, you may need to seek a protective order of the property from a court. Temporary property protection orders intend to avoid permanent losses resulting from concealment, dissipation or conveyance to third parties. This may include ordering one of the spouses not to dispose of marital property or interfere with property in the possession of the other spouse. The order may oblige a spouse to maintain insurance and utility service and continue other routine activities essential to preserve the assets. Courts can issue temporary orders to prevent third parties from damaging or wasting marital property that is in their possession.

Proving Dissipation

A forensic accountant can help a spouse prove that their husband or wife is guilty of dissipation of marital property. A forensic accountant is a financial detective who can carefully sift through all financial records and flag anything that seems suspicious. Given their professional experience, they will know what to look for to uncover the truth.

To build a strong case against your spouse, you should first make sure that the amount in question is substantial. You cannot accuse your spouse of dissipation over a bouquet of flowers they bought for someone they are having an affair with. However, a five-day vacation for two to Hawaii booked through your joint credit card may be evidence of dissipation of assets.

A key thing to note is that the spending must be uncommon and frivolous. You cannot suddenly start considering your partner’s careless spending as asset dissipation. If they were the kind who spends a lot on cars during the marriage, the court will not consider buying a new expensive car during the divorce process as asset dissipation. Neither can you claim the spending to be wasteful, especially if similar spendings were tolerated during the marriage.

Weighing the Benefits

It might be hard for you to prove the dissipation of assets, so before you decide to try, you need to study the potential cost of investigation and attorney time. Sometimes, the fees of an attorney, a forensic accountant, and a legal team might cost you more than what the court will give you as compensation if you win the court case.

Consequences & Remedies for Dissipation of Marital Assets

Dissipation of assets can have severe consequences on the affected spouse. In some households, particularly in the high-income ones, one of the spouses, usually the wife, gives up her career and chooses to take care of the household.

In that case, if the husband starts wasting marital assets to prevent her from receiving her share after the divorce, she will not be able to maintain the lifestyle she enjoyed during the marriage. In addition to that, if she chooses to resume her career, she will not be able to earn much when she returns to the workforce.

Therefore, a bump in the road for a rich husband can mean losing livelihood for a stay-at-home wife or vice-versa.

Remedy for Dissipation:

If a spouse hides, destroys or spends the money before or despite the other spouse securing a protective order, they will need specific evidence about the money dissipated. With enough proof, the court can provide some remedy to the victim.

Once the court notifies the spouse accused of dissipation about the allegations, it becomes his responsibility to prove where he spent his assets. In case the judge determines that dissipation occurred, the offending spouse will likely get a smaller share of the marital assets. In some cases, the court might require them to reimburse the other spouse for the dissipated assets.

Such a remedy can lead to monetary compensation. On the other hand, if the item the spouse sold or destroyed had sentimental value to the other person, the money they will receive in the property division may be insufficient to make up for what they lost.

Conclusion

  • Marital property includes all real estate and other properties the couple bought or acquired during their marriage.
  • A spouse can dissipate marital property by removing items from the house or from the innocent spouse’s business.
  • Sometimes, spiteful spouses would prefer to lose assets and money before the divorce rather than let the other spouse benefit from their value after it.
  • Precautionary steps you can take to protect personal belongings before a divorce are better than the remedies that the court might offer you after the dissipation of the assets. Thus, you must take the matter of protecting assets in a divorce very seriously.
  • You can protect your marital assets before the divorce situation begins, open a separate bank account, or get a protective order for your property.
  • A court can offer remedies for dissipated properties by giving a smaller share of marital assets to the offending spouse in the final distribution.
  • Allegations of dissipation are serious and can have severe consequences, which is why a spouse should not make them impulsively and without proof.

In conclusion, assets acquired during a marriage are subject to fair distribution among the couple. Spouses who wish to dissipate these assets out of spite and anger should think twice before doing it. Although asset dissipation is not an easy accusation to prove, the offending spouse will suffer the consequences once the other person can prove it.

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Divorce & Finance