A Serious Form of Marital Misconduct

Dissipation includes a variety of transgressions against the marriage — the wasting of marital assets through extravagant spending, high living, gambling, excessive borrowing or fraudulent conveyance to third parties.

Courts, which increasing view a marriage as an economic unit, look with disfavor on the dissipation of assets. Most consider it serious marital misconduct — more serious than, for example, marital infidelity.

Dissipation often happens when one spouse hides assets that might be shared with the other as part of the property settlement. Very often women are at a disadvantage because the husband manages the money. Sometimes these machinations become quite complicated and require a forensic accountant who can analyze financial records for evidence of secretion.

One common form of dissipation of assets is the expenditure of marital funds for a girlfriend or paramour.

Courts deal with dissipation after the fact via unequal distribution of the remaining marital assets in favor of the victim party. 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 gambles away marital assets in the casinos may find the losses negatively credited to his or her share of the marital estate.

Sometimes assets improperly conveyed to friendly third parties may be ordered restored to the marital estate under the terms of Uniform Fraudulent Transfers Act (UFTA).

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.

Expenditures or loss associated with a valid marital purpose are more problematic. Valid marital purpose would be when one partner spends marital assets on routine living expenses, business expenses associated with a marital business, reasonable maintenance and payment of taxes on marital property.

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 controlled the asset at the time of the loss; and 4) the loss was not incidental to a valid marital purpose. Loss can take many forms. In one California case a number of years ago, an angry husband who heaved his wife’s jewelry in the Pacific Ocean learned the meaning of dissipation when the court charged the value against his share of the marital pie.

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