Family Law

Property Division in Divorce: Wasting Assets

By Kristina Otterstrom, Attorney
Getting to the bottom of a spouse’s frivolous or unauthorized spending.

What Constitutes Wasting Assets?

Either spouse’s waste of assets can happen during a marriage or in the course of divorce. It’s expected that spouses need to buy clothing, make down payments on items like cars or homes and buy gifts for family and friends. Generally, what distinguishes normal spending from waste is the amount spent, the purpose of the spending, and whether it was done with the other spouse’s knowledge and/or approval. For example, there’s a difference between one parent spending $500 on children’s clothes and a parent spending $50,000 on a luxury vehicle, or on a lavish shopping spree.

During the course of a divorce, either spouse may need a down payment on a new apartment or may need some car repairs. Those types of expenses aren’t considered wasteful spending. Instead, a spouse who dissipates assets is one who squanders a couple’s savings or racks up credit card debt either during marriage or while in the divorce process. Some examples of wasteful spending include:

  • gambling debts
  • excessive gifts to family members or friends
  • money spent on an extramarital affair or lover
  • extreme spending whether from a couple’s joint account or credit cards
  • a new loan taken out without the other spouse’s knowledge or approval
  • purchase of a new car
  • major business losses, and
  • significant stock investments.

If you suspect your spouse is wasting marital funds, talk to an attorney immediately. There are steps you can take to stop your spouse’s frivolous spending, including freezing assets.

Freezing Marital Assets

In certain circumstances, you can seek a court’s help to stop a spouse’s wasteful spending before the losses become too great. To obtain a financial restraining order, generally you’ll need to submit an emergency motion explaining that your spouse is squandering marital funds.

These types of emergency motions can become an order of the court immediately if you’ve brought the right evidence. When a judge issues an order freezing assets, it can work a number of ways. For example, a court order may allow each spouse to spend only a designated amount of money each month from the couple’s earnings. In other cases, a court order may prevent either spouse from selling or purchasing stocks, property, cars, and other assets. A financial restraining order can also prevent one spouse from opening new accounts and transferring marital funds to a secret account.

What Happens if a Judge Determines My Spouse Wasted Assets?

As discussed above, there are consequences for either spouse’s misuse of marital funds. The reasoning behind this rule is that certain monies belong to both spouses–they are marital. When one spouse misuses those funds, he or she has deprived the other spouse from getting a fair share. As a result, a judge will factor in either spouse’s reckless spending when dividing property, to ensure the innocent spouse is reimbursed.

This means that if your spouse spends $50,000 on a lover, you may be entitled to additional alimony or an equivalent amount of property to make up for the depleted funds. How much you receive will depend on the laws of your state and the unique facts of your case. Depending on whether you live in an equitable division or a community property state, your state’s laws will affect how a judge treats one spouse’s waste of marital assets. In either situation, you’re entitled to some form of compensation for your spouse’s spending.

Questions for Your Attorney

  • After we separated, my spouse quit his high-paying job. Could this be considered a dissipation of marital assets?
  • After I asked for a divorce, my spouse withdrew funds from her 401k without my knowledge? How can I get my share of that money back?
  • My spouse spent over $20,000 on a trip with friends against my wishes. Can I recover some of those funds in my divorce?

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