In California, spouses “share and share alike” when it comes to their assets – but what happens when the relationship breaks down and one spouse purposefully depletes the marital funds for selfish purposes that are unrelated to the marriage? This is often called dissipation of marital assets or “marital waste.”
Dissipation is not simply spending money in a way the other spouse dislikes. Married people routinely make different financial choices, and ordinary spending does not become misconduct when a divorce begins – even when the couple can’t agree on their approach to money.
What are some examples of marital waste?
What exactly dissipation looks like can vary from situation to situation. However, potential examples may include:
- Gifts, vacations, hotel rooms or rent for an affair partner
- Gambling away a substantial amount of money
- Unusually large withdrawals from joint accounts without explanation
- Significant (and questionable) “loans” to family or friends
- Selling marital property for $1 or anything far less than its value
- Deliberately damaging or destroying marital property to keep it from being divided
- Running up large debts in sudden, unusual shopping sprees
Timing and intent often matter. Any unusual transaction could be scrutinized if it occurred after the divorce was clearly anticipated.
What is not ordinarily considered dissipation?
It’s important to understand that not every purchase – even if it is unwise or unnecessary – constitutes marital waste. Examples of things that aren’t usually considered dissipation include:
- Paying the mortgage, utilities, groceries and other household expenses
- Buying ordinary clothing, meals or personal items
- Continuing a longstanding hobby at approximately the same spending level
- Making a poor investment in good faith
- Spending money with the other spouse’s knowledge or agreement
- Paying reasonable attorney fees related to the divorce, where permitted
For example, one spouse may resent the other for regularly buying expensive golf equipment. If that spending occurred throughout the marriage and was part of the couple’s established lifestyle, it may not be dissipation. Secretly withdrawing $20,000 after separation to take a new romantic partner on vacation, however, is a different story.
How can dissipation affect property division?
The courts heavily frown on marital waste – and a judge can make their feelings known in several ways. The value of the wasted assets can be imputed when the remaining assets are divided, with the aggrieved spouse receiving a larger share of what’s left. In some cases, a court may order one spouse to repay the other for lost assets.
A person who suspects marital waste should preserve bank statements, credit card records, tax returns, receipts and information about unusual transfers. Working with an experienced family law attorney can also help obtain fair results in a California divorce.