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Sometimes, when divorcing spouses start talking about how they’re going to divide assets, the relationship sours even more, and what were once “just” un-pleasantries can cross the line into outright ugliness. Now and then, it’s as though people take leave of their senses, and they let spite drive every decision.

In my business, I’ve observed the whole spectrum of divorce experiences, from couples who part as friends and honestly wish each other well, to instances where one spouse is determined to make the other destitute (or die trying). Cases where the husband earns significantly more than the wife can be particularly troubling because in these relationships, there’s a financial power imbalance that an unscrupulous husband can ruthlessly exploit. If the wife depends on him for her support, he can ruin her by withholding it. I’ve been amazed at the lengths to which some men will go to keep from dividing marital assets with their wives. Hiding and/or dissipating marital assets is unscrupulous and despicable—but unfortunately, it happens more often than you might think.

Dissipation of assets is, simply, intentional squandering or destruction of marital property to prevent the other spouse from getting a fair share of it in a divorce settlement. For example, a soon-to-be-ex-husband with a wish to see his wife impoverished might blow many thousands of dollars on his girlfriend, or in a casino. Sometimes one embittered spouse will make an enormous donation to a cause the other specifically does not support. In another case, an resentful husband threw his wife’s jewelry into the ocean.

However the martial assets are spent/destroyed, the point is that they’re gone—and no longer available to be divided as part of fair divorce settlement negotiations.

When the husband has a well-paying job, he knows he will rebound financially soon enough, maybe even through a single bonus check, as arranged through prior negotiation with his boss. (Yes, that happens.) For the wife, though, the consequences of losing her fair share of the wasted assets can be devastating—especially if she gave up paid work to manage home and family. A stay-at-home mom typically doesn’t have income of her own. Plus, she won’t command much when she reenters the work force.

What can you do to protect yourself if you suspect your husband may be dissipating assets?

First things first: Understand that dissipation of marital assets is governed by state laws, which vary widely. Some states require an Automatic Temporary Restraining Order (ATRO), preventing either spouse from changing the financial status quo of the marriage once a divorce action begins. In other cases, you’d have to seek a court order to freeze marital assets, and you’d have to give reasons for your allegations.

To make a convincing claim:

  • The timing has to be right.  
    • The spending you are protesting occurred after your divorce was clearly imminent. States will differ in how they define that.
  • You have to be talking about a substantial amount of money. 
    • How much? There’s no fixed rule. But you can’t claim dissipation of assets because your husband lost a few hundred bucks to his friends in poker games. If he flew them all to Las Vegas for a weekend that maxed out your joint credit card, that’s a different story.
  • The spending has to have been both frivolous and unusual.
  • If you and your husband invested in rental properties throughout your marriage, you won’t likely be able to claim dissipation of assets if he bought a condo in your usual price range, as that would be part of a pattern of spending that you previously approved.

Bottom line: Devastating financial damage can be done by someone actively trying to do it. Watch your joint credit card statements carefully for anything out of the ordinary or that you can’t identify. If you suspect your husband of dissipating marital assets, talk to your attorney as soon as possible to see if you can stop the bleeding.

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Reminder: Protect yourself against losing marital assets to dissipation before your settlement is agreed upon. Be vigilant and keep your attorney on speed dial.

Hot tip: Dissipation of assets can be hard to prove. Before you decide to try, make sure that the potential legal and investigation costs don’t exceed what you stand to gain by successfully making your case.

Legal matters: ATROs are not mandatory in all divorces, and some states don’t require them at all. Your attorney may have to request one. Ask about it as soon as possible to minimize the financial damage that can be done before the ATRO takes effect.

The post Dissipation Of Assets In Divorce appeared first on Think Financially, Not Emotionally®.

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