Dissipation describes marital funds wrongfully expended, for example, when marital money was used to purchase expensive gifts or trips for a spouse’s girlfriend or boyfriend or when one spouse expended large amounts of money on something unrelated to the marriage without the knowledge or consent of the other spouse.
In such cases, the court can order the spouse who wrongfully spent the money to repay the marital estate. However, the expenditures must have occurred after the marriage was irretrievably broken down and without the acquiescence of the other spouse. Extravagant spending, gambling or excessive borrowing or fraudulent conveyance to third parties – all are dissipation.
Courts look with disfavor on the dissipation of assets, which is the most common form of economic misconduct, and some judges consider it serious marital misbehavior. Very often, when one spouse contemplates a divorce, he or she hides assets that might otherwise be part of the property settlement. In this, wives are at a disadvantage because the husbands often manage the money. The machination of dissipation becomes quite complicated and requires a forensic accountant.
One common form of dissipation is the expenditure of marital funds for a girlfriend or paramour.
Very often courts deal with dissipation via unequal distribution of the remaining marital assets in favor of the victim spouse. The most common way is to treat the dissipated assets as marital property, and then distribute what is already gone as that party’s share of the marital pie. For instance, an alienated spouse who squandered money in the casinos may find the losses negatively credited to his or her share of the marital estate.